Top 10 Rated Dow Dividend-Paying Stocks

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Includes: CVX, HD, INTC, JNJ, JPM, KO, MCD, MSFT, PG, WMT
by: Dividend Stocks Online

The Dow is made up of 30 stocks, most of which pay dividends. Many of these dividend payers have a history of consistent dividend growth. We used the DSO rating to identify the 10 best dividend stocks listed in the index. The DSO rating uses dividend yield, dividend growth, income growth, payout ratio and stock performance to rate stocks. It also gives special preference to companies with consecutive annual dividend increases.

Intel Corp (NASDAQ:INTC)

DSO Rating: 99. Intel has been a top performing stock for the DOW with its increase of 41% over the last 12 months. INTC has a dividend yield of 2.9% and a payout ratio of 35%. The company has increased its dividend for 8 consecutive years and has a 5 year dividend growth rate of 14.7%. The only thing this stock could do better is pay a slightly higher dividend.

The Coca-Cola Company (NYSE:KO)

DSO Rating: 98. Coke also has great dividend fundamentals that almost match up with Intel. The stock has a dividend yield of 2.7% and a payout ratio of 52%. KO has raised its dividend for 49 years and has a 5 year dividend growth rate of 8.6%. We would also like to see a slightly higher dividend from Coke.

McDonald's Corp (NYSE:MCD)

DSO Rating: 98. McDonald's has been another top Dow performer. The stock is up over 30% in the last 12 months. MCD has a dividend yield of 2.7% with a payout ratio of 50% which is below its 5 year payout ratio average of 59%. MCD has increased its dividend for 35 years and has a 5 year dividend growth rate of 24.8%.

Home Depot Inc (NYSE:HD)

DSO Rating: 96. Home Depot is one of the lower yielding top rated dividend stocks of the DOW with a 2.2% dividend yield. The company has a payout ratio of 44% and has a 5 year dividend growth rate of 7.8%. Home Depot resumed increasing the dividend in 2010 and if things continue as expected the company will have 3 years of consecutive dividend increases. HD stock is up 38% in the last 12 months.

Microsoft Corp (NASDAQ:MSFT)

DSO Rating: 96. Microsoft is one of the core holding of our dividend portfolio. It has a dividend yield of 2.2% and a payout ratio of 26%. The company has increased its dividend for 6 years and has a 5 year dividend growth rate of 13.7%. MSFT is up 27% over the last 12 months. We would like to see Microsoft make a bigger increase to the dividend.

Wal-Mart Stores Inc (NYSE:WMT)

DSO Rating: 95. Wal-Mart has a dividend yield of 2.4% and a low payout ratio of 34%. The company has increased its dividend for 36 years and has a 5 year dividend growth rate of 15.7%. WMT has a 3 year dividend growth rate of 8.7%.

Procter & Gamble (NYSE:PG)

DSO Rating: 93. Procter and Gamble has a good dividend yield of 3.1% which is above its 5 year yield average of 2.9%. The company has a payout ratio of 62%. PG started paying dividends in 1891 and has increased its dividend for 58 years. It has a 5 year dividend growth rate of 11.1%.

Johnson & Johnson (NYSE:JNJ)

DSO Rating: 93. JNJ has one of the higher dividend yields in the DOW of 3.5% which is above its 5 year yield average of 3.2%. The company started paying dividends in 1944 and has increased its dividend for 49 years. JNJ has a 5 year dividend growth rate of 8.7%.

Chevron Corp (NYSE:CVX)

DSO Rating: 92. Chevron has a dividend yield of 2.9% and a payout ratio of 24%. CVX started paying dividends in 1912 and has increased its dividend for 19 consecutive years. The company has a 5 year dividend growth rate of 8.9% and a 3 year net income growth rate of 4%. We would like to see net income grow at a faster rate.

JPMorgan Chase (NYSE:JPM)

DSO Rating: 92. While our rating system is mostly based on past performance and dividend history we are adding JPM to the top 10 list mostly because we are expecting big things out of this company over the next few years. It currently has a dividend yield of 2.2% and a payout ratio of 22%. JPM has started to put some solid dividend increases together and has a 3 year net income growth rate over 50%. Many analysts are expecting this stock to outperform in 2012.

Disclosure: I am long (MSFT), (JNJ).