Friday , 19 April 2024

Dogs of the Dow: A Simple Strategy Using the Dividend Yield

Investing in the Dogs of the Dow, which refers to the 10 highest-yielding bulldogs-wanna-playstocks in the Dow Jones Industrial Average at the end of the year, is a very simple strategy you can use in 2018 to beat the market. Here’s everything you need to know.

The original article has been edited here for length (…) and clarity ([ ]) by to provide a fast & easy read.

The concept behind the Dogs of the Dow is based on a simple correlation between price and dividend yield of the stock.

  • As price falls, the dividend yield rises, assuming the dividend is kept the same.
  • As the price of the stock rises, the yield falls, assuming the dividend stays the same.
  • By targeting the top-yielding stocks of the Dow, the strategy is targeting dividend stocks that likely underperformed in the previous year….
  • In short, the Dogs of the Dow strategy benefits as investors pour back into these dividend stocks in the upcoming year.

Below is the list for 2018:

Company Dividend Yield
Verizon Communications Inc. (NYSE: VZ) 4.42%
IBM Corp. (NYSE: IBM) 3.91%
Pfizer Inc. (NYSE: PFE) 3.75%
Exxon Mobil Corp. (NYSE: XOM) 3.67%
Chevron Corp. (NYSE: CVX) 3.45%
Merck & Co. (NYSE: MRK) 3.39%
The Coca-Cola Co. (NYSE: KO) 3.23%
Cisco Systems Inc. (Nasdaq: CSCO) 3.03%
The Procter & Gamble Co. (NYSE: PG) 3.00%
General Electric Co. (NYSE: GE) 2.70%

Solid Buys

Each of the above stocks are solid buys to outperform the market, but sticking with the strategy, you would buy all 10 to have an average gain above the broader market.

1. Verizon Communications Inc.: The never-ending demand for more data and faster internet, the companies that provide it will continue to win — and that’s the Verizons of the world.

2. The Coca-Cola Co.:…stock had a steady 2017, but is set to outperform this year.

3. The Procter & Gamble Co.  is our other consumer goods stock. It had a choppy 2017, but still ended higher.

4/5. IBM Corp. and Cisco Systems Inc. are the tech stocks this year. IBM struggled in 2017, while Cisco really took off in the last half of the year. We can expect both to head higher in 2018.

6/7. Pfizer Inc.  and Merck & Co. are both pharmaceutical stocks. Pfizer climbed steadily in 2017, and that’s set to continue. Merck struggled late in the year, and we are now looking for the rebound.

8/9. Exxon Mobil Corp. and Chevron Corp. are both oil-related stocks that are set to soar in 2018. Both finished 2017 strong and are set to continue that rally in 2018.

10. General Electric is on the cusp of a massive restructuring, and 2018 can be a great year as the stock rebounds.


Following the Dogs of the Dow strategy to beat the market, simply buy an equal dollar amount of each of these 10 stocks — and then repeat with the new Dogs of the Dow for next year.

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