3 Rock-Solid Dow Jones Dividend Stocks to Double Up on in June

Yahoo

6 days ago

Chevron is a high-yield dividend stock that's well positioned to withstand the current downturn in energy prices.
Honeywell's breakup could accelerate earnings growth within its businesses, not least through mergers and acquisitions.
Home Depot's growth has ground to a halt, but the stock is a good value and pays a reliable dividend.
10 stocks we like better than Chevron ›
The Dow Jones Industrial Average (DJINDICES: ^DJI) is one of the major stock market benchmarks. But unlike the S&P 500 (SNPINDEX: ^GSPC), which has just over 500 components, or the Nasdaq Composite (NASDAQINDEX: ^IXIC), which has a few thousand stocks, the Dow only contains 30 components.
Each company in the Dow is meant to represent a major stock market sector or industry. As representatives, Dow companies tend to be reliable, industry-leading businesses -- making the Dow a good place to look for blue chip stocks.
Here's why Chevron (NYSE: CVX), Honeywell International (NASDAQ: HON), and Home Depot (NYSE: HD) stand out as top Dow stocks to buy now.
Scott Levine (Chevron): With the midpoint of 2025 nearly upon us, it's a great time to look back on how things have fared so far and to take action if necessary. For those eager to start a new position, Chevron is a strong consideration right now. While the stock's performance this year has been unfavorable, it should certainly not dissuade patient investors with long investing horizons. Of course, the stock's 5% forward dividend yield doesn't hurt either.
An oil supermajor, Chevron has robust operations throughout the energy value chain. This, in part, helps the company weather downturns in energy prices -- something that savvy investors know well. For example, while the price of oil benchmark West Texas Intermediate has dropped nearly 12% since the start of the year, shares of Chevron have only dipped 3.5% lower at the time of this writing.
Furthermore, with energy prices lower, management has taken steps to ensure that the company's financial position remains strong. In addition to a $2 billion reduction in capital expenditures from 2024, management aims to achieve $2 billion to $3 billion in cost savings by the end of 2026.
Illustrating further the company's resilience during downturns in energy prices, Chevron has consistently hiked its dividend higher for 38 consecutive years -- a period that has certainly seen its share of plunging oil prices. And all the while, the company has continued rewarding shareholders and growing the business.
Shares are currently attractively priced, changing hands at 7.9 times operating cash flow, a discount to their five-year average multiple 8.4.
Lee Samaha (Honeywell International): Currently sporting a 2% dividend yield, Honeywell's attractiveness to passive income investors isn't about its current yield but more about its potential to increase it. Or rather, the ability of the three new companies that Honeywell will become to increase their earnings.
As readers already know, Honeywell is splitting into three different companies. Its advanced materials business, Solstice Advanced Materials, will be spun out in late 2025 or early 2026, with Honeywell Aerospace and Honeywell Automation separated in late 2026.
The motive behind the breakup makes sense and should allow the respective management teams to better focus on generating value for investors while running their own capital allocation policies. In addition, the new listings might attract investors looking for more pure-play stocks in sustainable technologies (advanced materials), industrial and building automation, and aerospace.
If there is criticism of Honeywell's management in recent years, it's come from its lackluster record in making acquisitions to boost growth, not least because the company tends to have a rock-solid balance sheet and an easily covered dividend.
That conservatism over acquisitions changed somewhat with Vimul Kapur's appointment as CEO in 2023 -- examples include the $4.95 billion acquisition of Carrier Global Access Solutions (Automation) last year and the recent announcement of a $1.8 billion deal to buy Johnson Matthey's catalyst technology business (Solstice).
These deals are part of a more aggressive approach to capital allocation, which should continue after the three stand-alone companies are created with their own priorities. As such, there's plenty of reason to believe they will create more value for investors as stand-alone companies.
Daniel Foelber (Home Depot): Home Depot stock dipped after reporting first-quarter fiscal 2025 results -- with the stock now down 6.8% year to date at the time of this writing.
Total revenue for the quarter was up 9.4% -- mainly thanks to Home Depot's blockbuster $18.25 billion acquisition of SRS Distribution. The acquisition was completed in June 2024 and therefore didn't impact first quarter fiscal 2024. Home Depot's comparable store sales decreased by 0.3% in the quarter -- illustrating consumer spending weakness.
Home Depot reaffirmed its guidance for fiscal 2025, but that guidance wasn't great to begin with. The company expects just a 1% increase in comparable sales growth over the same 52-week period in fiscal 2024.
On its latest earnings call, Home Depot discussed the impact of high interest rates and mortgage rates as causes for low housing turnover despite a need for home improvement on a relatively old housing stock -- with 55% of homes now 40 years or older. Home Depot said that consumers are working on smaller projects like painting and yardwork but are hesitant to take on larger projects because they typically require financing, like tapping into home equity.
However, the longer consumers put off home improvement projects, the greater the pent-up demand when the cycle turns. It's worth understanding that Home Depot's customers tend to make good income and have equity in their homes -- which is why a strong housing market is vital to Home Depot's results. Home Depot CEO Ted Decker said the following on the first-quarter 2025 earnings call:
But again, the thing to keep in mind is we have a very different customer and a very different sort of use case for expenditure in home improvement. So, our customer, from a broad basis, is one of the strongest in the economy. The average income is $110,000, 80% of our customers own their homes. We've talked about how much home price appreciation they've seen over the past year. Stock markets have recovered, job and wage growth are strong. So, our customer is in a good spot right now.
Home Depot may not be firing on all cylinders right now, but it has an excellent business model and an industry-leading position in the home improvement industry, making it a coiled spring for long-term economic growth.
The company has paid and raised its dividend every year since 2010 and yields 2.5% at the time of this writing -- making it a solid source of passive income. Home Depot's valuation is reasonable, with a 24.6 price-to-earnings ratio -- just slightly above its 10-year median of 22.9.
Add it all up, and Home Depot is a great choice for long-term investors who care more about a company's future than its near-term challenges.
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Daniel Foelber has no position in any of the stocks mentioned. Lee Samaha has no position in any of the stocks mentioned. Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron and Home Depot. The Motley Fool has a disclosure policy.
3 Rock-Solid Dow Jones Dividend Stocks to Double Up on in June was originally published by The Motley Fool