The Dow Jones Industrial Average, also known as simply the Dow for short, is a collection of 30 of the largest public companies
in the United States.
The index simply tracks the performance of the 30 stocks that consist of the "who's who" of corporate America; the index is also
diverse in terms of industry and products sold.
The "Industrial" part of the title is merely historic, as the index dates back to the late 1880s. Today, the index is composed
of companies in media, entertainment, telecommunication, restaurants and insurance, among others.
A stock that is included in the index is often referred to as a Dow component.
Companies are added and taken away to the index by the owners of the index, S&P Global.
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The majority of companies that make up the index are household names, or companies that own brands that are mostly recognizable
by the majority of people. The biggest company by market capitalization is Apple Inc. (NASDAQ: AAPL), and General Electric Company (NYSE: GE) is the only current company that was included in the original index back in the
1800s.
The Dividend Component
Given the size and stature of a Dow component, companies typically pay a consistent stream of dividends to shareholders.
Dividend payments offer long-term investors a tremendous opportunity to not only collect a cash payment consistently, but benefit
from an upswing in the stock.
Billionaire investor Warren Buffett invested more than $1 billion in The Coca-Cola Co (NYSE: KO) in the late 1980s and has been collecting a dividend check since. As of early May,
Buffett holds 400 million shares of Coca Cola, which pay a dividend of $0.33 per share and implies the "Oracle of Omaha" collects a
check of $132 million each quarter.
Coca-Cola, like every Dow component, is expected by investors to not only pay a steady dividend but increase dividend payments
over the years.
Here are the top 3 highest dividend yielding stocks in the Dow 30:
-
Chevron Corporation (NYSE: CVS): The oil and gas
company has a dividend yield of 4.32 percent.
-
Verizon Communications Inc. (NYSE: VZ): The
telecommunication giant has a dividend yield of 4.15 percent.
-
Caterpillar Inc. (NYSE: CAT): The seller of heavy
machinery has a dividend yield of 3.76 percent.
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