Should You Buy the 3 Highest-Paying Dividend Stocks in the Dow Jones?

Some investors view high dividend yields in a negative light. They think any stock with an especially high yield is one to avoid.

Others, though, embrace such stocks. There are even investing strategies focused on buying blue-chip stocks in the Dow Jones Industrial Average with the highest yields. The idea is that these stocks tend to be more attractively valued.

Should you buy the three highest-paying dividend stocks in the Dow Jones right now? Here they are -- and whether or not they're good picks.

1. Walgreens Boots Alliance

Walgreens Boots Alliance (WBA 1.06%) easily ranks at the top of our list. The retail and wholesale pharmacy giant's dividend yield currently stands at nearly 8.4%. Walgreens' yield is sky-high in large part because of its dismal stock performance. The company's share price has plunged close to 40% in 2023 and fell sharply in 2022 as well.

Income investors have liked Walgreens for a long time thanks to the company's 47-year track record of dividend increases. However, it appears that streak is about to end. Walgreens hasn't announced a dividend increase this year, and time is quickly running out.

One other side effect of Walgreens' steep stock decline is that it has a bottom-of-the-barrel valuation. Shares trade at a forward price-to-earnings multiple of under 7x.

So is Walgreens stock a good choice to buy right now? I think that it depends on your investing style. The company faces continued business challenges and turnover in its executive team. I expect the stock to remain highly volatile. Risk-averse investors are probably best staying away.

On the other hand, highly aggressive investors seeking a potential long-term turnaround opportunity might like Walgreens. Keep in mind that the company may be forced to cut its dividend at some point, though.

2. Verizon Communications

Verizon Communications (VZ 0.73%) comes in second place among Dow stocks with its dividend yield of nearly 6.9%. In addition to this high yield, the company claims the best track record in the telecommunications industry with 17 consecutive years of dividend increases.

Investors didn't have much to cheer about with Verizon throughout much of 2023. By early in the third quarter, the stock was down more than 20% year to date. However, Verizon has made an impressive comeback and just might finish the year in positive territory.

This strong rebound is due to the company's better-than-expected third-quarter results. Most importantly, Verizon generated solid free cash flow and even raised its free cash flow guidance for full-year 2023 by $1 billion.

Verizon's dividend appears to be safe and likely to continue growing. The company operates in a highly competitive industry but is taking smart steps to attract new customers and retain existing ones. I think this Dow stock is a good pick for income investors.

3. 3M

The No. 3 highest-paying dividend stock in the Dow is 3M (MMM 8.33%). The large manufacturer's dividend yield tops 5.8%. 3M is also a Dividend King with 65 consecutive years of dividend increases.

I'm not confident that the company will keep its streak of dividend hikes going, though. 3M agreed to pay $6 billion to settle litigation over allegedly faulty military-grade earplugs that it made. This hefty settlement could make it difficult for 3M to pay out its dividend at current levels.

Like Verizon, 3M has mounted a comeback after its stock sank during the first three quarters of 2023. The company's Q3 update provided a much-needed catalyst, with increased full-year earnings and cash flow guidance especially helping.

I don't think that 3M is out of the woods just yet, though. My view is that most investors will be better off staying on the sidelines with the stock.