Should You Double Down on These 3 Dow Jones Dividend Stocks Near All-Time Highs?

The Dow Jones Industrial Average (^DJI -0.51%) contains 30 industry-leading companies that act as representatives of the broader stock market. The Dow has undergone significant changes in recent years, with the addition of growth stocks such as Salesforce in 2020 and Amazon and Nvidia in 2024. However, the index remains a great starting point for finding top dividend stocks.

Here's why these Fool.com contributors think Honeywell International (HON -1.24%) of the industrial sector, financial sector representative American Express (AXP -0.26%), and consumer staples stalwart Coca-Cola (KO 1.29%) are three great dividend stocks to buy now, even though they are hovering around all-time highs.

Honeywell's breakup will create value for investors

Lee Samaha (Honeywell): Despite the recent sell-off of the industrial stock, it remains close to its all-time high price.

The investment case for this Dow Jones member currently revolves around its impending breakup and the amount of value that can be released in its constituent parts as they trade as stand-alone companies.

It's a breakup with an understandable rationale. For example, aerospace companies (Honeywell Aerospace will be the largest of the three new companies) are traditionally valued differently from industrial companies to reflect the long-cycle nature of their business.

Honeywell Automation (set to be the remaining company) combines building automation and industrial automation, and its separation is part of a trend of industrial companies becoming more focused as automation becomes more software-driven by leveraging artificial intelligence (AI) and digitalization technologies. It's a trend followed by peers like Emerson Electric, Siemens, and Johnson Controls.

Finally, the advanced materials business (Solstice Advanced Materials) will offer investors an opportunity to invest in a pure-play sustainable materials business.

As you can see from this short description, they are significantly different businesses. When separated into three more focused and agile companies with their own capital raising dynamics and sets of investors behind them, they will have an opportunity to release value for investors.

American Express remains a good value for long-term investors

Daniel Foelber (American Express): The financial services company is knocking on the door of an all-time high for all the right reasons. American Express continues to deliver excellent results despite pressures on consumer spending by catering to affluent customers.

American Express charges relatively high fees for its top credit cards, but it makes those fees worth it by offering cardholders attractive perks — such as high baseline cash back rates and a variety of reward redemption options.

Unlike Visa and Mastercard, American Express is both a payment processor and a card issuer. Its revenue stream is diverse, consisting of card fees, as well as transaction fees related to card usage frequency and volume.

It's a near-perfect business model — as long as American Express customers pay off their loans. In its latest quarter (second quarter of 2025), American Express reported a 2% net write-off rate. It defines net write-off as a principal loss from a consumer or small business card member, net of what American Express was able to recover (interest not included). Net write-offs are also known as net charge-offs.

According to the Federal Reserve Bank of St. Louis, net charge-off rates on credit card banks at all commercial banks for the first quarter of 2025 were 4.44%. This means that American Express does an exceptional job of managing risk and limiting steep losses from customers not paying their loans.

American Express is similar to an insurance company that has a track record of above-average underwriting — like those owned by Berkshire Hathaway (American Express also happens to be one of Berkshire's largest holdings). In other words, the risk American Express is taking is of high quality relative to the industry — which makes investing in the company more appealing.

Over the last three years, American Express stock has soared 130.3% compared to 43.2% diluted earnings per share (EPS) growth. So the stock isn't as cheap as it used to be — with a 21.8 price-to-earnings (P/E) ratio compared to a 17.2 10-year median P/E. However, American Express is arguably worth the premium price due to the strength of its underlying business model and clear path toward future earnings growth.

Put some pop in your passive income stream with Coca-Cola

Scott Levine (Coca-Cola): Although shares of Coca-Cola have trended lower over the past few weeks, it was only a few months ago that shares had been their most effervescent.

On April 22, Coca-Cola stock bubbled up to uncharted territory when it climbed to an intraday high of $74.38 and ultimately closed at $73.90. Since then, shares have retreated from that level, falling about 6% as of this writing. Nonetheless, shares are hardly sporting a frothy valuation, and investors looking to quench their thirst for passive income would be wise to consider Coca-Cola stock along with its forward-yielding 2.9% dividend.

Those who only know Coca-Cola for the legendary namesake soft drink may be surprised to learn that the company has consistently acquired a variety of brands over the years. From its acquisition of Minute Maid, a popular juice brand, to gaining a well-known iced tea brand with the acquisition of Honest Tea, to picking up a recognizable milk name in its acquisition of Fairlife, Coca-Cola has diversified its portfolio considerably over the decades. As lifestyle trends shift toward consumers adopting healthier habits, Coca-Cola is well-positioned to prosper from its robust portfolio of consumer beverage brands.

In addition to owning the title of the world's largest beverage company, Coca-Cola wears the crown of Dividend King, having consistently hiked its distribution for 63 consecutive years. While it's not a guarantee that the company will rack up another six decades of dividend hikes, it's certainly an auspicious sign that management is committed to rewarding shareholders.

A cursory glance at Coca-Cola's valuation suggests that today's not a great time to click the buy button. Shares are trading a 21.7 times operating cash flow. Dig a little deeper, however, and investors will find that the valuation is actually a discount to the stock's five-year average cash flow multiple of 22.6. As an industry leader with a strong track record of returning capital to shareholders, Coca-Cola stock is a great option now.