Dividends4Life: These Dow Dividend Stocks Not As Stingy As They Look

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Many investors rely on dividend income in order to meet their cash flow needs from their investment portfolios. All 30 components of the Dow Jones industrial average pay dividends, but there's a wide disparity across how much those stocks pay. With the five lowest-yielding Dow stocks paying less than 1.25% in dividends, it's tempting to conclude that some companies are simply too tightfisted with their cash. Yet if you look beyond dividends, you'll find that several of these Dow stalwarts aren't as stingy as you might think. Let's take a closer look at these five stocks and how they make up for their low dividend yields.

Across the 30 Dow stocks, the average dividend yield is about 2.5%, so paying half that amount or less is a slap in the face for the typical income investor. Yet that's exactly what you'll get from a wide range of companies. Financial stalwarts Goldman Sachs (GS) and Visa (V) are in this anti-elite group, along with consumer giants Nike (NKE) and Walt Disney (DIS). Health insurance company UnitedHealth Group (UNH) rounds out the bottom five in dividend yield. What dividend yields ignore, though, is the capital companies return to shareholders through stock buybacks. In the past, dividends took even more of a backseat to share repurchases, as dividends are taxable to all shareholders while buybacks only impose taxes on those who sell their shares.

Source: USA Today

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