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One of the best places to look for dividend stocks is the blue chip companies that are in the DJIA. These are usually solid companies that are leaders in their industries and have usually lower risk than the rest of the market. All 30 companies comprising the index pay a dividend, with the average dividend yield for the index of 2.7% as of June 8, 2012, some 20 basis points higher than a year ago. Among the index components, only Procter & Gamble (NYSE:PG) and 3M Corporation (NYSE:MMM) have boosted their dividends each year for at least 50 years.

Below is the overview of the five highest yielding stocks of The Dow Jones Industrial Average/The Dow 30 index.

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AT&T (NYSE:T) is a $205 billion U.S. telecommunications giant. The company has been a component of The Dow 30 since 1999. It currently pays the highest dividend yield of The Dow 30's blue chip companies. It yields 5.2%, some 40 basis points above the industry average, but almost double the average dividend yield for the index as a whole. The company's peer Verizon Communications (NYSE:VZ) pays a yield of 4.8%, while competitor Sprint Nextel (NYSE:S) does not pay any dividends. The company's payout ratio of 255% of earnings is excessively high, but is much lower as a percentage of free cash flow, at 73%. Over the past five years, AT&T has raised dividends by an average annual rate of 4.8%. Among fund managers, the stock is popular with Ray Dalio, who acquired the stock in the first quarter of 2012 at an average cost of $28.65 per share. AT&T stock is currently trading at $34.55, near its 52-week high.

Verizon Communications is another telecom giant in the U.S., with a total capitalization of $120 billion. The company has been The Dow 30 component since 2004. Verizon pays a dividend yield of 4.8%, the second highest among the index's 30 blue chip companies. This yield is some 210 basis points above the index's average dividend yield. The company's rival AT&T, boasts the highest dividend yield among The Dow 30 constituents. Sprint Nextel does not pay any dividends. Verizon Communication's payout ratio is at a high 215% of earnings; however, as a percentage of free cash flow, the ratio is at a lower 37%. The telecom giant has increased its dividend at an average rate of 4.2% a year over the past five years. The stock is popular with hedge fund manager Ray Dalio, who acquired it in the first quarter of 2012 at an average price of $36.21. Billionaire Ken Fisher is also bullish about the stock. Currently, the stock is changing hands at a 52-week high level of $42.44 a share.

Merck & Co. (NYSE:MRK) is a pharmaceutical giant with a total capitalization of $117 billion. The company has been a constituent of The Dow 30 since 1979. Merck's stock has the third highest yield among the index's components. Its 4.4% dividend yield is 170 basis points above the index's average yield. The company's competitors Pfizer (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and Abbott Laboratories (NYSE:ABT), boast yields of 4.0%, 3.9%, and 3.3%, respectively. Merck's dividend payout ratio is at 75%. The company has increased dividends at an average rate of 1% per year over the past five years. Hedge fund manager Irving Kahn (Kahn Brothers - see top picks) is an investor in the company. Merck is currently trading at $38.46 a share.

Pfizer is a $167 billion U.S.-based multinational pharmaceutical company. It has been a component of The Dow 30 since 2004. The company has the fourth highest dividend yield among The Dow 30 companies. At 4.0%, its dividend yield is some 130 basis points above the average yield of the index and 150 basis points above the average industry yield. Pfizer's competitors Merck & Co. and Johnson & Johnson pay yields of 4.4% and 3.9%, respectively. Pfizer has a dividend payout ratio of 72%. The company cut its dividend in 2009 and 2010, but since 2010, it has raised the dividend by 22%. Billionaires Ken Fisher, Donald Yacktman, and George Soros own the stock. The stock is currently trading at $22.14 a share.

Johnson & Johnson is another U.S.-based multinational pharmaceutical and medical devices company. It has a market capitalization of $173 billion. The company has been The Dow 30 constituent since 1997. It has the fifth largest dividend yield among the index members. Johnson & Johnson pays a dividend yield of 3.9% on a payout ratio of 67%. This yield is 120 basis points above the average yield for the index and 140 basis points above the industry average yield. The company's peers Merck and Pfizer pay higher dividend yields of 4.4% and 4.0%. Medtronic (NYSE:MDT), the company's competitor in the medical devices market, has a dividend yield of 2.6%. Johnson & Johnson has increased dividends at an average annual rate of 8.5%. Billionaires Warren Buffett and Ken Fisher are fans of the company. The stock is currently trading at $63.00 a share.

Source: 5 Highest Dividend Yields Of The Dow Jones Industrial Average