The Top Dividend Stocks of the Dow

03/19/08 - 01:58 PM EDT

DD INTC LMT MOT (Stocks Under $10 PICK) MRK NOK VZ

James Altucher

Updated from 12:48 p.m. EDT

More than half of the stocks in the Dow Jones Industrial Average yield 2.5% or more, and 10 of the Dow stocks, tracked by Stockpickr, have yields of 3.5% or more. Although there are a few financial stocks whose dividend yields may now be in jeopardy, there are plenty of solid companies with favorable payouts.

Verizon VZ is one of the high-yield stocks with a payout rate of 5.1%. The telcom company just announced that it will be activating the U.S.- China section of the Trans-Pacific Express submarine cable in July, ahead of schedule and in time for the Summer Olympic Games in Beijing. The stock has a forward price-to-earnings (P/E) ratio of 12 and a P/E-to-growth (PEG) ratio of 1.6.

Verizon shares are owned by the Rydex Telecommunications Fund, which is managed by Michael Byrum and, as its name suggests, invests in communications products and services companies. Rydex also owns shares of Cisco Systems CSCO, which has a forward P/E of 15 and a PEG of 1.2, Vodafone Group VOD, which has a forward P/E of 11 and a PEG of 1.4, and Nokia NOK, with a forward P/E of 11.6 and a PEG of 1.

Another high-yielding Dow stock is Merck MRK, which offers a 3.7% yield. The Food and Drug Administration recently halted the late-stage clinical trials for Heplisav, a Hepatitis B vaccine Merck is developing with Dynavax DVAX. Merck shares have a forward P/E of 11.6 and a PEG of 1.3.

Merck is favored by Ken Fisher, the Forbes columnist and manager of Fisher Asset Management, which has $30 billion in assets. Fisher also likes Gilead Sciences GILD, which has a P/E of 22 and a PEG of 1.4, Devon Energy DVN, with a P/E of 12 and a PEG of 1.3, and Lockheed Martin LMT, which has a P/E of 12 and a PEG of 1.2.

DuPont DD is a Dow stock that yields 3.6%. The chemicals company just increased its quarterly guidance due to anticipated increases in agricultural product sales. The stock has a forward P/E of 13 and a PEG of 1.8.

The portfolio of the Delaware Dividend Income Fund includes DuPont shares. Delaware is a five-star Morningstar-rated five star fund managed by Damon Andres. Among its other stock holdings are Intel INTC, which has a P/E of 14 and a PEG of 1.1, and Motorola MOT, which has a forward P/E of 15 and a PEG of 9.

For more high-yield stock ideas, check out the Top Dividend Dow Stocks at Stockpickr.com.