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Best High Dividend Dow Stocks

Best high dividend Dow stocks are better for your retirement than long term treasury bonds. Investors are concerned about large budget deficits and Fed’s loose monetary policy. One of the most successful hedge fund managers, Ray Dalio believes that the devaluation of the heavily indebted country currencies is inevitable, and investors should protect themselves for the near future.

BRIDGEWATER ASSOCIATES

Like Ray Dalio, we also believe that investors should play more defensively and invest in high dividend yielding stocks in the upcoming inflationary environment. High dividend stocks generally perform well and usually increase dividend payments over the succeeding 5-10 years. We believe high dividend yielding stocks will perform better than T-bonds over the next 10 years.

We compiled this list of 30 Dow stocks and ranked them based on their annualized dividend yields. The market data are sourced from Fidelity. The stocks with higher and lower dividends, and their performances are shown below:

In the last 52-week period, the average return of the high dividend Dow stocks was 8.33%. The second group of 15 stocks with lower dividend yields returned 3.10% on average, underperforming the stocks in the first group. The performance of the first group was still better since the beginning of this year. The average YTD return of the first group was 3.39% vs. -6.80% for the second group.

Here are the top 10 Dow stocks with the highest dividend yields:

1. AT & T (T): AT & T is a large telephone and television services provider. T has a 5.90% dividend yield and returned 8.40% during the past 12 months. T recently traded at $29.17 and gained 5.16% year-to-date. The stock has a market cap of $172.45B and P/E Ratio of 8.84.

2. Verizon (VZ): Verizon is a global telecommunications company. VZ has a 5.36% dividend yield and returned 21.28% to its investors during the past 12 months. VZ recently traded at $37.33 and returned 9.99% since beginning of this year. The stock has a market cap of $105.67B and P/E ratio of 16.67. Phil Gross and Jim Simons are the most prominent VZ investors.

3. Merck & Co Inc. (MRK): Merck & Co Inc. is one of the largest pharmaceutical companies in the world. MRK has a 4.61% dividend yield but lost -7.15% during the past 12 months. MRK recently traded at $32.98 and lost -528% year-to-date. The stock has a market cap of $101.60B and P/E ratio of 35.46. Ric Dillon’s Diamond Hill holds the largest MRK position among the 300-plus funds we are tracking.

4. Pfizer Inc. (PFE): Pfizer Inc. is another leading pharmaceutical company in the world. PFE has a 4.20% dividend yield and returned 12.40% during the past 12 months. PFE recently traded at $19.04 and returned 12.20% in 2011. The stock has a market cap of $146.37B and P/E ratio of 17.37. David Einhorn has the largest PFE position among the funds we are tracking, holding more than $500 Million of the stock. Ken Fisher, Lee Ainslie, David Tepper and Phil Gross are other prominent PFE investors.

5. DuPont (DD): DuPont is an American company providing a wide range of science-based products and related services worldwide. DD has a 3.64% dividend yield and returned 0.22% during the past 12 months. DD recently traded at $45.09 and lost -7.39% year-to-date. The stock has a market cap of $42.05B and P/E ratio of 12.49. Phill Gross is among DD investors.

6. General Electric Co. (GE): General Electric Co. is a large conglomerate providing technology, media, and financial services worldwide. GE has a 3.61% dividend yield and returned -0.06% during the past 12 months. GE recently traded at $16.60 and lost -6.95% since the beginning of this year. The stock has a market cap of $171.94B and P/E ratio of 12.67. Ken Fisher had nearly $600 Million in GE at the end of June 2011.

7. Intel Corp. (INTC): Intel Corp. is a global technology company that manufactures microprocessor products. INTC has a 3.57% dividend yield and returned 25.80% during the past 12 months. INTC recently traded at $23.50 and returned 14.69% since the beginning of this year. The stock has a market cap of $123.40B and P/E ratio of 10.63. Paul Ruddock’s Lansdowne Partners holds more than $510 Million of INTC.

8. Johnson & Johnson (JNJ): Johnson & Johnson is a multinational company that provides consumer healthcare and pharmaceutical products. JNJ has a 3.52% dividend yield and returned 5.17% during the past 12 months. JNJ recently traded at $64.72 and returned 7.45% year-to-date. The stock has a market cap of $176.01B and P/E ratio of 15.37. Warren Buffett had a massive $2.8 Billion worth position in JNJ.

9. Kraft Foods Inc. (KFT): Kraft Foods Inc. is an American food company providing snacks, confectionery, and quick meal products worldwide. KFT has a 3.29% dividend yield and returned 14.76% during the past 12 months. KFT recently traded at $35.23 and returned 14.76% in 2011. The stock has a market cap of $62.22B and P/E ratio of 20.25. Buffett had $3 Billion invested in KFT shares. Bill Ackman also holds a large KFT position.

10. Procter & Gamble Co. (PG): Procter & Gamble Co. is a global company that provides a wide range of consumer packaged goods. PG has a 3.24% dividend yield and returned 6.64% during the past 12 months. PG recently traded at $64.89 and returned 3.30% year-to-date. The stock has a market cap of $177.66B and P/E ratio of 16.45. Warren Buffett had a massive $4.8B worth holding in PG. D.E. Shaw, Ken Fisher and Jim Simons are also among PG investors.

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