In this article, we will take a look at some of the best dogs of the Dow.
Investors who focus on dividends are often attracted to stocks offering high yields and build their portfolios accordingly. One popular method is the Dogs of the Dow (DOD) strategy, which involves picking the 10 highest-yielding stocks from the Dow Jones Industrial Average (DJIA) each year. The idea behind this strategy is that these stocks are temporarily undervalued or overlooked by the market. By investing in them, investors aim to capture both dividend income and potential price gains once these stocks rebound.
This strategy has shown strong results over time. Michael O’Higgins found that over a 26-year span, a theoretical portfolio based on high-yield Dow stocks delivered an annual return of 17.9%, outperforming the Dow’s own return of 13% during the same period.
Still, experts urge investors to use this strategy with caution. Kevin Simpson, founder and chief investment officer at Capital Wealth Planning, shared his thoughts on this approach during a CNBC interview and made the following comment:
“The idea here is that just because they’re ‘Dogs of the Dow’ — some of them really are dogs — and you have to be careful and selective as a stock picker.”
Given this, we will take a look at some of the best dogs of the Dow to invest in.
Our Methodology:
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 11 stocks with the highest dividend yields as of July 26. The stocks are ranked in ascending order of their dividend yields. We also considered hedge fund sentiment around each stock using Insider Monkey’s data for Q1 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11. NIKE, Inc. (NYSE:NKE)
Dividend Yield as of July 26: 2.10%
NIKE, Inc. (NYSE:NKE) is among the best dogs of the Dow to invest in. The world’s biggest footwear company stated on Thursday that existing tariffs might push its costs up by around $1 billion. This announcement followed the release of its fiscal fourth-quarter 2025 results, which managed to surpass estimates.
In fiscal Q4 2025, NIKE, Inc. (NYSE:NKE) reported revenue of $11.1 billion, which fell by nearly 12% from the same period last year. However, the revenue surpassed analysts’ estimates by $373.5 million. The fourth quarter marked the period with the most significant financial impact from the company’s “Win Now” initiatives, and management expects these pressures to ease going forward. Leadership expressed confidence in the firm’s ability to steer through the current unpredictable environment by maintaining focus on controllable factors and effectively carrying out the “Win Now” strategy.
NIKE, Inc. (NYSE:NKE)’s cash position also remained stable. The company ended the year with cash and equivalents and short-term investments of $9.2 billion. During the year, it returned $2.3 billion to shareholders through dividends. The company offers a quarterly dividend of $0.40 per share and has a dividend yield of 2.10%, as of July 26. It has raised its payouts for 23 consecutive years.
10. Cisco Systems, Inc. (NASDAQ:CSCO)
Dividend Yield as of July 26: 2.39%
Cisco Systems, Inc. (NASDAQ:CSCO) is widely recognized for its networking, cybersecurity, software, and cloud computing solutions. It produces routers and switches that use the Internet Protocol to move data across networks.
Artificial intelligence has become a major growth area for Cisco Systems, Inc. (NASDAQ:CSCO), with AI-related revenue exceeding $1 billion in 2024. Cisco aims to at least double that figure in 2025. A key factor in this expansion has been its $28 billion acquisition of Splunk, completed last year, which is intended to strengthen customers’ capabilities in networking, security, and AI.
Cisco Systems, Inc. (NASDAQ:CSCO) reported strong earnings in its fiscal Q3 2025. The company’s revenue came in at $14.15 billion, which showed an 11.4% growth from the same period last year. The revenue also beat analysts’ estimates by $91.4 million. Orders for AI infrastructure from webscale clients surpassed $600 million, allowing the company to hit its $1 billion goal a quarter ahead of schedule. This strong performance in AI is driven by the strength of its secure networking solutions, strong global alliances, and the value it consistently delivers to customers.
Cisco Systems, Inc. (NASDAQ:CSCO) generated an operating cash flow of $4.1 billion during the quarter, and it returned $1.6 billion to investors through dividends. In addition, it has raised its payouts for 18 consecutive years. Currently, it offers a quarterly dividend of $0.41 per share and has a dividend yield of 2.39%, as of July 26.
9. The Home Depot, Inc. (NYSE:HD)
Dividend Yield as of July 26: 2.45%
The Home Depot, Inc. (NYSE:HD) is among the best dogs of the Dow to invest in. The company is facing challenges expanding its business amid a tough economic climate marked by elevated interest rates and growing caution among consumers when it comes to major purchases.
Still, several positive trends could work in the company’s favor. Housing inventory in the US remains tight compared to demand, and the average home is aging. In addition, homeowners have access to trillions of dollars in home equity that could be used for remodeling and improvements. As economic conditions stabilize or improve, Home Depot is likely to benefit from stronger demand.
In the first quarter of 2025, The Home Depot, Inc. (NYSE:HD) reported revenue of $39.86 billion, up 9.44% from the same period last year. Comparable sales declined by 0.3%, while US comparable sales saw a slight increase of 0.2%. The company noted that fluctuations in foreign exchange rates had a negative effect, reducing overall comparable sales by about 70 basis points.
The Home Depot, Inc. (NYSE:HD) reported an operating cash flow of $4.3 billion and ended the quarter with $1.4 billion in cash and cash equivalents. The company is a reliable dividend payer with 16 consecutive years of dividend growth under its belt. Currently, it offers a quarterly dividend of $2.30 per share for a dividend yield of 2.45%, as of July 26.
