Many Dow component stocks have dividend yields a levels not see for many years. The dividend yield is the annual cash that the company pays to shareholders for each share of stock that they own divided by the price of that stock.  So, for example, if a company is trading at $10 a share and pays a dividend of 50 cents per share each year, the dividend yield is 5%.  While higher yields in individual stocks have occurred is the past, the number of companies with high yields today that is what's unusual.  Normally, high dividend yields are seen as a sign of value--in this case, perhaps, extraordinary value.  However, some analysts caution about a "value trap."  The reasoning goes something like this: the dividend yield is high because the company is in serious financial or business trouble.  These problems are recognized by the market and are reflected in the low stock price.  For a given dividend, the lower the stock price goes, the higher is the dividend yield.  Even though stock prices are low now (and the dividend yields are concomitantly high), the price of the stock could go even lower if the company is in serious trouble.  Alternatively, as has happened already, the dividend could be cut in order to preserve cash.  Having said that, high dividend yields from quality companies are often a sign that more study is needed.  Stocks can lose value for reasons other than financial problems.  In fact, if the financial or business problems can be satisfactorily addressed, the share price usually recovers.  The companies in the Dow are usually among the largest and best capitalized in the market, so they warrant special attention.  Listed below is a number of Dow component stocks and the accompanying dividend yield.

• Bank of America [NYSE:BA] 8.3%
• Citigroup [NYSE:C] 6.9%
• Pfizer [NYSE:PFE] 6.4%
• AT&T [NYSE:T] 5.1%
• Verizon [NYSE:VZ] 5.1%

All in all great companies, but each faces short term challenges.  More investigation is certainly in order.