(Dow 30 Dividend Stocks)

Today’s tool is a link to a dividend investor web site: http://www.dividend.com. The link at the end of this post takes you to the list of the top thirty companies in the USA. These dividend-paying companies are called “blue chip stocks.”

Blue Chip stocks are reasonably safe investments for the long haul because they typically represent the biggest companies. The Dow Jones Industrial Average, or simply the Dow or DJIA, is a stock market index that indicates the value of 30 large, publicly owned companies based in the United States. Just about anyone would recognize many of the names: Apple, American Express, Boeing, Caterpillar, Cisco, Chevron, Disney and so on. We hold thirteen of the thirty in our retirement accounts. The ones we currently own are AAPL, BA, CSCO, HD, IBM, INTC, MCD, MMM, MSFT, PFE, UNH, VZ and WMT. Of course, because we also hold shares of ETFs SCHD and VYM, it is likely that we hold shares in all thirty.

Here are some things to know about these companies and some alternatives:

  1. If they pay a dividend, it is likely that they increase it every year.
  2. Because these are very large businesses, it is more difficult for them to grow their businesses in a meaningful way. For that reason, it is wise to include mid-cap and small-cap dividend-growth stocks in your investment portfolio. Buy an S&P 500 ETF or low-cost index mutual fund.
  3. For the average investor, it is probably best to just buy an ETF like SCHD to get a good dividend with diversification. However, another intriguing option is EDOW, the First Trust Dow 30 Equal Weight ETF. Equal weight means that every one of the 30 positions is a bit more than 3% of the total. Of course, this isn’t perfect, as a company like BA might out-perform MRK and become a larger portion of the pie. Also be aware that the expense ratio for EDOW is 0.50% and that it is a very small ETF.
  4. A better choice than EDOW might be FDVV “Fidelity® High Dividend ETF.”

More about EDOW:

EDOW seeks investment results that correspond generally to the price and yield of an equity index called the Dow Jones Industrial Average Equal Weight Index. The index consists of an equally weighted portfolio of the 30 securities that comprise the DJIA. The 30 securities comprising the DJIA are domestic, blue-chip companies covering several industries, excluding transportation and utilities.