Dividend-paying stocks are a great way to combine current income with the prospects for future growth. Many investors looking for the top dividend-paying stocks in the market turn to a strategy known as the Dogs of the Dow to maximize both income and returns. All 30 of the components of the Dow Jones Industrials (DJINDICES: ^DJI) are stocks that pay dividends, but by focusing on some of the top-yielding stocks in the average, you can capture more in dividend payments — and sometimes produce great returns.
This year, companies such as Caterpillar (NYSE: CAT), Chevron (NYSE: CVX), and IBM (NYSE: IBM)have a big lead over the overall Dow in terms of total return and dividend yield. Below, we’ll look more closely at what these key dividend-payers have done and why they might continue to do well.