In this article, we discuss 12 Dogs of the Dow dividend stocks to buy. You can skip our detailed analysis of the dogs of the Dow strategy and its returns over the years, and go directly to read 5 Dogs of the Dow Dividend Stocks to Buy.
Many investors who prioritize dividends find dividend yields appealing. They often follow strategies centered around buying stocks with high dividend yields. One popular method in this regard is investing in the Dogs of the Dow (DOD), where investors annually choose and invest in the top 10 dividend-yielding stocks from the Dow Jones Industrial Average (DJIA). This strategy assumes that these high-yield stocks, known as "Dogs," are currently undervalued or unpopular. By investing in them, investors aim to gain from potential price increases while enjoying a consistent income from dividends.
The DOD strategy has demonstrated consistent performance over the years, although there have been variations in its success from year to year. Some years have been more favorable than others in terms of the strategy's effectiveness. Michael O'Higgins discovered that over a period of 26 years, a hypothetical portfolio consisting of high dividend-yield stocks from the Dow Jones generated an annualized return of 17.9%. This outperformed the annualized return of the DJIA, which was 13%.
As mentioned above, the investment philosophy of the DOD aligns with blue-chip and value-style dividend-driven investment strategies. These strategies emphasize the importance of consistent and sustainable dividends. The DJIA Market Index is considered an excellent choice for investors seeking "safe" high-dividend yielding opportunities. The stocks in the DJIA consist of well-established multinational companies with a strong likelihood of maintaining high dividend payments. These companies are better positioned to recover from financial distress or business cycles due to their long-term track records, distinguishing them from other large-capitalization stocks.
A study published in the International Journal of Trade, Economics, and Finance examined different versions of the DOD strategy and found that they consistently outperformed the DJIA when considering risk-adjusted measures. The research focused on three variations of the DOD strategy—Dow-10, Dow-5, and "Small Dogs of the Dow." It also took into account more recent market data, including the 2001 dot-com bubble, the 2008 financial crisis, and the post-2008 stock market recovery. The findings of the study indicate that all three DOD strategies showed superior investment performance compared to the DJIA market index from 1996 to 2006. According to the report, Dow 10, which is the traditional DOD portfolio, delivered a total return of 406.6% during this period, outperforming its benchmark index, which returned 355.6%.
Some of the best stocks from the category include JPMorgan Chase & Co. (NYSE:JPM), Chevron Corporation (NYSE:CVX), and Verizon Communications Inc. (NYSE:VZ). To read more about this strategy, readers can have a look at our previous article 11 Best Dogs of the Dow Stocks Ranked By Hedge Fund Sentiment. In this article, we will discuss some other best dogs of the Dow to invest in.
We began with a pool of 30 stocks from the Dow Jones Industrial Average (DJIA) and identified dividend-paying stocks from this selection. As a majority of the stocks in the index offer dividends, we specifically picked the 12 stocks with the highest dividend yields as of November 9. The stocks are ranked in ascending order of their dividend yields.
JPMorgan Chase & Co. (NYSE:JPM) is an American financial institution that operates in various segments of the financial services industry. In the third quarter of 2023, the company reported revenue of roughly $40 billion, which showed a 22% hike from the same period last year. During the quarter, the company returned over $3.1 billion to shareholders through dividends.
JPMorgan Chase & Co. (NYSE:JPM), one of the dogs of the Dow, currently pays a quarterly dividend of $1.05 per share. The stock has a dividend yield of 2.89%, as of November 9.
At the end of Q2 2023, 106 hedge funds tracked by Insider Monkey reported having stakes in JPMorgan Chase & Co. (NYSE:JPM), compared with 112 in the previous quarter. The consolidated value of these stakes is over $4.3 billion.
Cisco Systems, Inc. (NASDAQ:CSCO) is next on our list of the best dogs of the Dow to buy. The American technology company specializes in networking hardware, software, and telecommunications equipment. The company has raised its dividends for 16 consecutive years and currently pays a quarterly dividend of $0.39 per share. As of November 9, the stock has a dividend yield of 3.01%.
As of the end of Q2 2023, 55 hedge funds in Insider Monkey's database owned stakes in Cisco Systems, Inc. (NASDAQ:CSCO), down from 61 in the previous quarter. The collective value of these stakes is roughly $1.5 billion. With nearly 11 million shares, AQR Capital Management was the company's leading stakeholder in Q2.
Amgen Inc. (NASDAQ:AMGN) is a California-based biotechnology company that focuses on the discovery, development, and manufacturing of innovative human therapeutics. The company declared a quarterly dividend of $2.13 per share on October 24, which was in line with its previous dividend. It has raised its payouts every year since 2011. With a dividend yield of 3.16% as of November 9, AMGN is among the top dogs of the Dow.
Amgen Inc. (NASDAQ:AMGN) has always remained committed to its shareholder obligation. In the third quarter of 2023, the company returned $1.1 billion to shareholders through dividends. Its free cash flow for the quarter came in at $2.5 billion.
At the end of June 2023, 57 hedge funds tracked by Insider Monkey owned stakes in Amgen Inc. (NASDAQ:AMGN), which remained unchanged from its previous quarter. The total value of these stakes is more than $1.5 billion.
Johnson & Johnson (NYSE:JNJ) is an American multinational corporation that operates in the healthcare industry and is mainly known for its pharmaceutical products. In the third quarter of 2023, the company posted revenue of $21.3 billion, which not only beat analysts' consensus by $300 but also showed a 6.8% growth on a year-over-year basis. Its net earnings for the quarter came in at $4.3 billion, in line with the prior-year period.
Johnson & Johnson (NYSE:JNJ) has raised its dividends for 61 years straight and it currently pays a quarterly dividend of $1.19 per share. The stock has a dividend yield of 3.18%, as of November 9.
Insider Monkey's Q2 2023 database indicated that 88 hedge funds owned investments in Johnson & Johnson (NYSE:JNJ), up from 86 in the preceding quarter. These stakes have a consolidated value of over $4.1 billion. Among these hedge funds, Bridgewater Associates was the company's leading stakeholder in Q2.
An American multinational beverage company, The Coca-Cola Company (NYSE:KO) is one of the best dogs of the Dow on our list with a dividend yield of 3.24%, as recorded on November 9. The company pays a quarterly dividend of $0.46 per share. It has been rewarding shareholders with growing dividends for the past 61 years.
Warren Buffett's Berkshire Hathaway owned 400 million shares in The Coca-Cola Company (NYSE:KO) at the end of Q2 2023, becoming the company's leading stakeholder. Overall, 61 hedge funds in Insider Monkey's database reported having stakes in the company, worth collectively over $27.2 billion.
The Goldman Sachs Group, Inc. (NYSE:GS) is a New York-based global investment banking, securities, and investment management firm. The company also operates an investment management division that offers a range of investment products and services to institutions, high-net-worth individuals, and retail investors.
At present, The Goldman Sachs Group, Inc. (NYSE:GS) offers a quarterly dividend of $2.75 per share for a dividend yield of 3.37%, as of November 9. In the most recent quarter, the company reported a strong cash position as it had over $240 billion available in cash and cash equivalents at the end of September. Moreover, it also returned $937 million to shareholders through dividends during the quarter.
At the end of the June quarter of 2023, 70 hedge funds in Insider Monkey's database reported having stakes in The Goldman Sachs Group, Inc. (NYSE:GS), up from 69 in the previous quarter. These stakes are collectively valued at more than $3.1 billion.
Chevron Corporation (NYSE:CVX) is an American multinational energy corporation involved in various aspects of the energy industry. The company engages in the exploration, production, and development of oil and natural gas reserves. In the first nine months of the year, the company generated enough cash to return nearly $20 billion to shareholders through dividends and share repurchases. This amount represented a 27% hike from the last year's total for the same period.
Chevron Corporation (NYSE:CVX), one of the best dogs of the Dow, holds a 36-year streak of consistent dividend growth. The company currently pays a quarterly dividend of $1.51 per share and has a dividend yield of 4.20%, as recorded on November 9.
Chevron Corporation (NYSE:CVX) was a part of 73 hedge fund portfolios at the end of Q2 2023, up significantly from 64 a quarter earlier. The stakes owned by these hedge funds are valued at over $21.4 billion in total.
