5 Dogs of the Dow Stocks for 2017

Dogs of the Dow, an investment strategy popularized by Michael B. O’Higgins in 1991, has been the darling of yield-seeking investors as it guarantees steady return irrespective of market conditions. How does that happen? The Dogs of the Dow are essentially the top 10 dividend-paying blue-chip stocks of Dow Jones Industrial Average. The built-in dividend income strength and good reputation of these companies ensure a strong price appreciation. But their high dividend is the key attraction. High dividend yields suggest that these stocks are in the oversold territory and will rebound faster than any other stock when the business cycle changes. This would result in higher capital appreciation over the one-year period along with juicy yields.

From 1957 to 2003, the Dogs outperformed the Dow by about 3%, averaging an annual return of 14.3%, compared to 11% for the Dow. The performance between 1973 and 1996 was even more impressive, as the Dogs returned 20.3% annually, while the Dow produced a 15.8% return. In 2013, the Dogs provided an average yield of 3.6%, compared to 2.6% for the DJIA. The average yield of the Dogs exceeds that of the DJIA by nearly the same margin this year. Below we present five stocks from the Dow with the highest dividend yields, each of which also has a favorable Zacks Rank: Verizon Communications Inc.‘s (VZ), Pfizer Inc. (PFE), Chevron Corporation (CVX), Caterpillar Inc. (CAT) and ExxonMobil Corporation (XOM).

Source: InvestorPlace

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