Dogs of the Dow relies on the premise that blue-chip companies do not alter their dividend to reflect trading conditions and, therefore, the dividend is a measure of the average worth of the company. In contrast, the stock price does fluctuate throughout the business cycle.
This should mean that companies with a high dividend relative to stock price are near the bottom of their business cycle, so their stock price likely would increase faster than companies with low dividend yields. In this scenario, an investor reinvesting in high-dividend-yielding companies annually should outperform the overall market.
Dividend stocks offer current income and growth potential, so it is no surprise many investors are attracted to them. All 30 companies that comprise the DJIA pay dividends and are among the most important blue-chip businesses in the global economy.
There are many ways to purchase these securities. You can hand-pick individual stocks and build your own portfolio; invest directly in the Dow through exchange-traded funds (ETFs); or instead of investing in the entire Dow, you can follow the Dogs of the Dow strategy, whose stocks offer better yields than the Dow as a whole. Often, in fact, the Dogs have been able to outperform the Dow over the course of the year.
The 2021 Dogs of the Dow are listed below.
| The 2021 Dogs of the Dow | |||
|---|---|---|---|
| Ticker | Company | Dividend Yield | |
| 1 | AMGN | Amgen Inc. | 3.06% |
| 2 | CSCO | Cisco Systems | 3.22% |
| 3 | CVX | Chevron Corp. | 6.11% |
| 4 | DOW | Dow Inc. | 5.05% |
| 5 | IBM | IBM | 5.18% |
| 6 | KO | The Coca-Cola Co. | 2.99% |
| 7 | MMM | 3M Co. | 3.36% |
| 8 | MRK | Merck & Co. | 3.18% |
| 9 | VZ | Verizon | 4.27% |
| 10 | WBA | Walgreens Boots | 4.69% |
As of Dec. 31, 2020