Tuesday, April 13, 2010

En-Dow-ed with Dividends

6 Dow Dividend Stocks That Are Thriving in 2010

Investors looking for dividend stocks among the Dow Jones components should consider Verizon (VZ) and AT&T (T). After all, these two telecom giants offer the highest yields of the 30 Dow stocks. However, despite their near 7% dividend yields, both stocks have been disappointments for income investors this year. Sure, their quarterly dividend payments have been generous, but this year Verizon’s stock has fallen over 9% and AT&T isn’t far behind with a drop of nearly a 6%. Meanwhile, the Dow Jones index has gained over 5% in 2010.

However, as Bernard Baruch said, "I buy my straw hats in winter." Thus, patient investors might enjoy substantial gains if they acquire these shares while it appears they are on sale.

Even though investing in the highest yielding Dow dividend stocks has led to subpar returns in 2010, that alone is no reason for investors to avoid stocks with high yields altogether. In fact, 9 out of the 12 highest yielding dividend stocks in the Dow have posted gains this year. Six Dow dividend stocks have already posted gains of over 10% from share-price appreciation this year. Their hefty dividen yields push their total-return figures even higher.

DuPont (DD)

DuPont investors have seen its seen stock price climb over about 15% since the beginning of the year. Meanwhile, the stock currently pays a quarterly dividend of 41 cents, which gives Dupont shares a current yield of 4.2%.

Home Depot (HD)

Home Depot’s stock price has been climbing steadily higher since reporting earnings in February. The stock has gained 15% since the beginning of 2010, but still yields 2.8%.

Caterpillar (CAT)

Even with a 15% gain in its stock price this year, Caterpillar still offers a 2.6% dividend yield. Growth prospects at this industrial firm appear bright as well, with analysts expecting earnings to grow by 22% this year and 49% in 2011.

Kraft Foods (KFT)

Kraft is the 4th highest yielding stock in the Dow index with a 3.8% dividend yield. In 2010, investors have not only enjoyed this stock's hefty yield, but also the 11% gain in the stock price.

Intel (INTC)

Intel increased its quarterly dividend by 12.5% in January and currently offers investors a 2.8% yield. Dividend-growth investors are not only happy with the dividend increase, but also the 11% jump in Intel’s share price this year.

McDonald’s (MCD)

Since 2006, McDonald’s has been the top performing stock in the Dow Jones index. The stock gained 86% during that period. Meanwhile the stock has risen 10% in 2010, which means the fast food chain is offering investors a 3.2% dividend yield. Moreover, the company has increased its dividend every year since 1976.

Don’t be fooled by AT&T and Verizon’s subpar performances this year -- high yielding Dow dividend stocks are thriving in 2010.

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