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7 Best Dividend Stocks of the Dow


After last year's spectacular stock market rally, many investors have relearned this year that share price gains aren't guaranteed. That should foster a new appreciation for cash dividends—particularly among older investors, who will need rising income in retirement.

We researched the 30 blue-chip companies in the Dow Jones industrial average, looking for two investment features: a strong track record of dividend increases, plus a business outlook healthy enough to support continued dividend generosity and long-term stock price growth. That's the concept of total return—dividend income plus stock performance. Think of it this way: If you earn 2.5% a year in dividends, a modest 7.5% rise in the stock price means a 10% total return.

Here are our seven picks. They aren't the Dow stocks with the highest current dividend yields because those companies are typically ones with below-average prospects for earnings and dividend growth. Likewise, some of the best-known consumer stocks, including Coca-Cola (KO) and McDonald's (MCD), failed to make the list because they're facing intense competitive pressures.

Companies are ranked by rate of dividend increase over the past five years. Prices and returns are through October 28.

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