Dogs of the Dow: 3 Dividend Giants With Double-Digit Upside

The Dow Jones Industrial Average is the oldest stock market benchmark, and it dates back to 1896. The index contains 30 publicly traded corporations, and none of those companies were on the original list in 1896. The index’s revolving door of members indicates how much the stock market, the economy, and consumers have evolved over time.

Many of the Dow Jones companies look promising, but there are also a bunch of dividend giants that pay solid yields and have plenty of upside heading into the second half of the year. These are some of the Dow Jones stocks that can gain momentum and surprise investors this year.

Walmart (WMT)

Investors were initially nervous about how tariffs would affect Walmart (NYSE:WMT) and other retailers. Although Walmart makes billions of dollars each year, the company has paper-thin profit margins. Walmart’s profit margins hover at just below 3% in most quarters, so tariffs that could have increased product prices by more than 10% would have hurt the business.

However, President Trump recently announced that he has reached a trade agreement with China. Trump also announced that a trade deal with India was in its final stages, indicating easing tensions and a temporary end to uncertainty. Walmart should do well as these deals get confirmed. Shares have been flat over the past two months, but this news can help Walmart build on its 7% year-to-date gain.

Walmart also has a long-term opportunity with its e-commerce and advertising segments. E-commerce allows it to reach more customers, and its numerous retail locations make it easy for the company to ship products within 1-2 business days. Online advertising is a growing segment for Walmart. Although it’s a small percentage of total revenue, those online ads should boost Walmart’s profit margins in the long run.

Caterpillar (CAT)

Caterpillar (NYSE:CAT) has established itself as a leading construction company. Its equipment is the golden standard, and this credibility has resulted in a $180 billion valuation for the company. Revenue and net income both dipped year-over-year in the first quarter, while net profit margins dropped to 14.1%.

Shares are up by 6% year-to-date, but the stronger gains may come in the second half of the year. The Federal Reserve has hinted that interest rate cuts will start soon. They are projecting two rate cuts that bring the federal funds rate down by 0.50%. Lower rates will make it more affordable to borrow money and should increase construction activity in the process. Caterpillar stands to be a top beneficiary of that development, and it can help the company post better financial results in the second half of the year.

Caterpillar is also a great dividend growth stock with its 1.58% yield. Shares have more than tripled over the past five years, and Caterpillar regularly raises its dividend by close to 10% each year. 

American Express (AXP)

American Express (NYSE:AXP) makes a small percentage of every transaction for its credit cards. It’s been a successful business model for several decades, and despite its global visibility, American Express still has more room to run. 

The company regularly adds new cardholders and has been a big hit among millennial and Gen Z consumers. The company also has solid double-digit price margins and rising revenue and profits. It’s a good combination for long-term growth that has translated into a 233% gain over the past five years. Furthermore, shares are up by 4% year-to-date. 

American Express can surprise investors as lower interest rates boost consumer spending. It’s another great dividend growth stock due to its 1.05% yield that has been hiking its dividend by more than 10% per year for a while.

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