BOSTON ( TheStreet) -- When it comes to dividend investing, payout growth is just as important as current yield. Among the highest-yielding U.S. stocks are blue-chip Dow components. But, not all Dow stocks are on equal footing in terms of shareholder treatment. In fact, some of the highest-yielding Dow stocks, such as Pfizer ( PFE - Get Report), have cut their dividends in the past. Below is a snapshot of those with the best three-year dividend growth.

10. Exxon (XOM), 3-Year Dividend Growth: 28%
9. Caterpillar (CAT), 3-Year Dividend Growth: 29%
8. Coca-Cola (KO - Get Report), 3-Year Dividend Growth: 30%
7. J&J (JNJ - Get Report), 3-Year Dividend Growth: 30%
6. Microsoft (MSFT - Get Report), 3-Year Dividend Growth: 34%
5. P&G (PG - Get Report), 3-Year Dividend Growth: 39%
4. Wal-Mart (WMT - Get Report), 3-Year Dividend Growth: 43%
3. Un. Tech. (UTX), 3-Year Dividend Growth: 50%
2. Intel (INTC), 3-Year Dividend Growth: 71%
1. IBM (IBM), 3-Year Dividend Growth: 71%

Now, here is a look at the Dow companies expected to raise their dividend the most in 2011.

10. American Express ( AXP - Get Report) is a credit-card company. Third-quarter sales increased 9.7%, but net income and earnings per share more than doubled. American Express has grown its dividend 25% in the past year. It has boosted the payout 13%, on average, over three- and five-year spans. The stock receives buy recommendations from two-thirds of analysts in coverage. Piper Jaffray offers the highest price target, at $64, implying a 12-month gain of 43%. Credit Suisse rates the stock underperform with a low $40 target.

9. Wal-Mart ( WMT - Get Report) is the world's largest company, based on sales. Third-quarter revenue ascended 2.6% and net income increased 9.3%. Earnings per share advanced 16% to 95 cents, boosted by a smaller float. Wal-Mart has expanded its dividend 11% over a one-year span and 11%, on average, over three years. It has boosted the payout by 15%, on average, over a five-year span. Analysts remain optimistic about the stock's 2011 upside, with 24, or 71%, advising clients to purchase shares. HSBC offers a target of $68, suggesting a 26% one-year gain.

8. Johnson & Johnson ( JNJ - Get Report) sells consumer products, pharmaceuticals and medical devices. Its third-quarter profit inched up 2.2% to $3.4 billion, or $1.23 a share, as revenue declined marginally. J&J has boosted its quarterly distribution 9.3% in the past year, and 9.2% and nearly 11%, on average, respectively, over three- and five-year periods. Analysts are luke warm on the stock, which receives 13 buy ratings and 12 hold calls. No researchers advise selling. Citigroup predicts J&J's stock will advance 11% to $70. Goldman Sachs expects the shares to decrease to $59.

7. Coca-Cola ( KO - Get Report) makes syrup and beverages. Coke's third-quarter net income stretched 8.4% to $2.1 billion, or 88 cents a share, as sales increased 4.7%. Coke has amplified its dividend 7.3% in the past 12 months. It has boosted the payout 9% and 9.5%, on average, respectively, over three- and five-year spans. Coke is currently the highest rated Dow stock, based on analyst rankings. Of researchers following the company, 17, or 81%, advise purchasing its shares, and four recommend holding them. Barclays expects the stock to climb 18% to $74.

6. Microsoft ( MSFT - Get Report) is the world's largest software company, selling the Windows operating system and Office product suite. Fiscal first-quarter net income surged 51% to $5.4 billion, or 62 cents a share, as revenue extended 25%. Microsoft has increased its distribution 5.8% in the past year. It has grown the payout 10% and 11%, respectively, on average, over three- and five-year horizons. Three quarters of analysts in coverage recommend that clients buy Microsoft, making it the fourth highest-rated Dow stock. Stifel Financial projects a $40 price target.

5. Procter & Gamble ( PG - Get Report) is a consumer products company, selling beauty, grooming and health care products. Fiscal first-quarter net income dropped 6.8%, but earnings per share rose 5.2% to $1.02, boosted by a lower share count. Revenue inched up 1.6% to $20 billion. P&G's dividend has risen 9.6% over a one-year span. It has grown 12%, on average, in the past three years and the past five years. The stock receives buy ratings from 68% of analysts in coverage. A median target of $71.92 suggests an impending 12-month advance of 12%.

4. Pfizer ( PFE - Get Report) is the world's largest pharmaceutical company. Third-quarter net income tumbled 70% to $866 million, or 11 cents a share, as revenue rebounded 39%. Despite being among the cheapest Dow stocks, with a forward P/E of just 7.9 (a 35% peer discount), many investors are avoiding Pfizer due to patent expiry in 2011. Currently, 19, or 70% of researchers, rank the stock buy, six rate it hold and two rank it sell. JPMorgan is most optimistic about upside, offering a $24 price target. Conversely, Citigroup predicts that the shares will drop nearly 7% to $17.

3. General Electric ( GE - Get Report) is an industrial conglomerate. Its third-quarter earnings per share advanced 32% to 29 cents. Revenue declined 4.5%. GE has cut its dividend 25% in the past 12 months. The payout has dropped 26%, on average, over a three-year span and 13%, on average, over a five-year horizon. Still, analysts predict that distributions will rise in the near term as the economic recovery accelerates. Of those covering GE, 10, or 53%, advocate purchasing its shares and nine recommend holding them. Credit Suisse has a target of $22.

2. JPMorgan Chase ( JPM - Get Report) is a diversified financial services company. Like many other big-cap financials, JPMorgan cut its dividend during the financial crisis as it struggled to boost capital ratios and shore up its balance sheet. Currently, its stock pays a quarterly dividend of just five cents, converting to a paltry 0.5% yield. Researchers expect the payout to more than triple in the quarters ahead as earnings normalize. JPMorgan is the second highest-rated Dow stock, receiving positive reviews from 82% of analysts in coverage. FBR dissents, with a modest $45 target.

1. Bank of America ( BAC - Get Report), like JPMorgan, is a bank with retail, corporate and investment operations. Its dividend has plummeted from a high of 64 cents in 2008 to just 1 cent in the most-recent quarter. Analysts expect the distribution to more than triple in the near term. The distribution may have even further upside, given historical yields. Bank of America has been a recent top performer, having risen 21% in the past month as foreclosure scrutiny subsided. But an unfavorable court ruling in Massachusetts on Thursday sent the shares down 2.3% intraday.

-- Written by Jake Lynch in Boston.


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