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2023 Dogs Of The Dow List | Top 10 Highest Yielding Dow 30 Stocks Now


Updated on April 12th, 2023 by Nathan Parsh

The “Dogs of the Dow” investing strategy is a very simple way for investors to achieve diversification and income in their portfolios while remaining in the sphere of more conservative blue chip stocks.

The strategy consists of investing in the 10 highest-yielding stocks in the Dow Jones Industrial Average, an index of 30 large cap U.S. stocks.

Large-cap stocks represent businesses with market caps above $10 billion. There are hundreds of large-cap stocks to choose from. With this in mind, we have compiled a list of over 400 large-cap stocks in the S&P 500 Index, with market caps of $10 billion or more.

You can download your free copy of the large-cap stocks list, along with relevant financial metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the link below:

 

Click here to instantly download your free spreadsheet of all Large Cap Stocks now, along with important investing metrics.

The “Dogs of the Dow” strategy produces above-average income and concentrates on stocks that typically trade at lower valuations relative to the rest of the DJIA. Given that the DJIA represents some of the largest companies in the world, its “dogs” are typically companies with strong track records that have hit temporary problems.

This is a great and simple strategy for value investors looking to purchase good businesses that are currently out of favor.

To implement this strategy, take the amount of money you have to invest and then divide it equally among the 10 highest-yielding stocks in the DJIA. Hold these stocks for a whole year and then at the end of 12 months, look at the 30 Dow stocks again and resort them by dividend yield from highest to lowest.

Rebalance and reallocate your capital accordingly and repeat the process. In addition to the simplicity and focus on quality, value, and income that this strategy generates, it also improves discipline by preventing excessive emotion-driven trading.

It also encourages investors to reap the tax benefits from holding positions for at least one year before selling, thereby being taxed at the long-term capital gains tax rate instead of the short-term rate.

The 2023 Dogs of the Dow

The list of the 2023 Dogs of the Dow is below, along with the current dividend yield of the top-ten yielding DJIA stocks. Click on a company’s name to jump directly to analysis on that company.

Dog of the Dow #10: Goldman Sachs Group Inc (GS)

Goldman Sachs was founded in 1869 and has grown into one of the world’s leading financial companies over the last 150+ years. The company has a focus on investment banking but competes in a wide variety of service activities to a diverse and broad base of global customers.

Goldman Sachs reported fourth quarter and full-year results on January 17th, 2023.

Source: Investor Presentation

Results for the period were much weaker than expected. Earnings-per-share totaled $3.32, but this was well off consensus estimates of $5.97 and below last year’s total of $10.81. Full-year earnings-per-share declined almost 50% to $30.06.

Provisions for credit losses were $972 million, ahead of estimates of $659 million and nearly triple the total from the year-ago period.

Revenue fell 12% to $10.6 billion, which was $300 million less than expected. Operating expenses increased to $8.09 billion from $7.27 billion a year ago, which was also ahead of estimates.

Given the backdrop of Goldman Sachs’ fourth quarter, our initial estimate for earnings-per-share is $34.75, but note that the company’s earnings results are extremely volatile, particularly if the U.S. enters a moderate to severe recession this year.

Click here to download our most recent Sure Analysis report on Goldman Sachs Group Inc (GS) (preview of page 1 of 3 shown below):


Dog of the Dow #9: Cisco Systems (CSCO)

Cisco Systems is the global leader in high-performance computer networking systems. The company’s routers and switches allow networks worldwide to connect to each other through the internet. Cisco also offers data center, cloud, and security products. Cisco generates about $51 billion in annual revenues.

On February 15th, 2023, Cisco announced a 2.6% dividend increase in the quarterly payment to $0.39 per share.

Also, on February 15th, 2023, Cisco reported earnings results for the second quarter of the fiscal year 2023.

Source: Investor Presentation

Revenue grew 7.1% to $13.6 billion. Adjusted earnings-per-share of $0.88 compared to $0.84 in the prior year.

Secure Agile Networks, formerly known as Infrastructure, grew by 14%, End-to-End Security, formerly known as Security, improved by 7%, and Optimized Application Experiences were higher by 11%. Internet for the Future fell by 1%, while Collaboration was lower by 10%.

By region, the Americas grew 9%, Europe/Middle East/Africa increased by 5%, and Asia-Pacific/Japan/China was up by 1%. Total gross margins contracted 130 basis points to 51%. Deferred revenue grew 7% to $23.9 billion. Cisco repurchased 26 million shares at an average price of $47.72 during the quarter. The company remaining share repurchase authorization is $13.4 billion, or 6.5% of the current market cap.

Cisco offered a revised outlook for the fiscal year 2023 as well, with the company now expecting revenue growth of 9% to 10.5%, compared to 4.5% to 6.5% and 4% to 6% previously. Adjusted earnings-per-share is now expected in a range of $3.73 to $3.49, compared to $3.51 to $3.58 and $3.49 to $3.56 previously. At the midpoint, this would be an 11.9% improvement from the prior year.

Click here to download our most recent Sure Analysis report on Cisco Systems (CSCO) (preview of page 1 of 3 shown below):


Dog of the Dow #8: JPMorgan Chase (JPM)

JPMorgan was founded in 1799 as one of the first commercial banks in the U.S. Since then, it has merged or acquired more than 1,200 different institutions, creating a global banking behemoth with about $124 billion in annual revenue. JPMorgan competes in every major segment of financial services, including consumer banking, commercial banking, home lending, credit cards, asset management, and investment banking.

JPMorgan Chase reported fourth quarter and full-year earnings results on January 13th, 2023, and results were better than expected.

Source: Investor Presentation

The company’s adjusted earnings-per-share for the quarter blew away expectations, coming in at $3.56, which was 46 cents ahead of estimates. Revenue surged 18% year-over-year to $34.5 billion, which was $270 million more than expected.

Provisions for credit losses were $2.29 billion, up from $1.54 billion in Q3 and nearly double the $1.29 billion from last year’s Q4.

Total loans ended the period at $1.14 trillion, up from $1.11 trillion at the end of September. Total deposits were $2.34 trillion, down from $2.41 trillion in the prior quarter. We see the loan-to-deposit ratio near 49% as a sign of management’s caution in the next few quarters.

Management noted that it would target $12 billion in share repurchases this year, helping to drive our initial estimate of $12.00 in earnings-per-share for 2023.

Click here to download our most recent Sure Analysis report on JPMorgan Chase (JPM) (preview of page 1 of 3 shown below):


Dog of the Dow #7: Amgen Inc. (AMGN)

Amgen is the largest independent biotech company in the world. Amgen discovers, develops, manufactures, and sells medicines that treat serious illnesses. The company focuses on six therapeutic areas: cardiovascular disease, oncology, bone health, neuroscience, nephrology, and inflammation. Amgen generates about $26 billion in annual revenues.

On December 12th, 2022, Amgen announced a 9.8% quarterly dividend increase to $2.13.

On January 31st, 2023, Amgen announced fourth-quarter and full-year results. Revenue declined 0.6% to $6.8 billion for the quarter, though this topped estimates by $30 million. Adjusted earnings-per-share of $4.09 compared unfavorably to $4.40 in the prior year but was in line with estimates.

Product revenue increased 4% on higher volume for key products.

Source: Investor Presentation

Sales for Enbrel, which treats rheumatoid arthritis and remains Amgen’s top-grossing product, decreased 1%, extending the year-over-year declines to eleven consecutive quarters. This was an improvement from the 14% decline in Q3. The company expects the net selling price to continue to decline as the product faces competition.

Prolia, which treats osteoporosis and should become the top-grossing product sometime this year, grew 14% due to 11% volume growth and higher average prices. Osteoporosis diagnoses in the U.S. are now nearly back to pre-COVID-19 levels, a slight sequential improvement.

Finally, Amgen provided guidance for the year as well. The company expects $17.4 to $18.60 per share in 2023.

Click here to download our most recent Sure Analysis report on Amgen Inc. (AMGN) (preview of page 1 of 3 shown below):


Dog of the Dow #6: Chevron Corporation (CVX)

Chevron is the fourth-largest oil major in the world. In 2022, Chevron generated 79% of its earnings from its upstream segment.

On January 27th, 2023, Chevron reported financial results for the fourth quarter and full year.

Source: Investor Presentation

The company cut its production by -3% over last year’s quarter, but Chevron benefited greatly from record refining margins, which resulted from the sanctions of western countries on Russia for its invasion of Ukraine. As a result, the oil major grew its adjusted earnings-per-share by 60%, from $2.56 to $4.09, though this was $0.20 below estimates.

Chevron also raised its dividend by 6% and announced a massive share repurchase program of $75 billion, or 23% of its current market capitalization.

As we do not expect sanctions to be withdrawn anytime soon, we expect oil and gas prices to remain excessive this year, and thus we project earnings-per-share for the year will be $15.00.

Click here to download our most recent Sure Analysis report on Chevron Corporation (CVX) (preview of page 1 of 3 shown below):


Dog of the Dow #5: Dow Inc. (DOW)

Dow Inc. is a standalone company that was spun off from its former parent, DowDuPont. That company has broken into three publicly traded, standalone parts, with the former Materials Science business becoming the new Dow Inc. Dow should produce about $50 billion in revenue this year.

Dow reported fourth-quarter earnings on January 26th, 2023, and the results were weak.

Source: Investor Presentation 

Adjusted earnings-per-share came to $0.46, which was 11 cents below estimates. Revenue decreased by 18% to $11.9 billion and missed expectations by nearly $200 million.

The decline in sales was due to lower revenue in all operating segments, as the company noted slower economic activity globally and destocking customer behavior. All segments posted a decline in local pricing as well.

Dow noted that it would lay off about 2,000 employees globally as it aims to reduce costs by $1 billion in 2023. Due to the dour outlook, we project just $3.15 of earnings-per-share this year.

Click here to download our most recent Sure Analysis report on Dow Inc. (DOW) (preview of page 1 of 3 shown below):


Dog of the Dow #4: International Business Machines (IBM)

IBM is a global information technology company that provides integrated enterprise solutions for software, hardware, and services. IBM’s focus is running mission-critical systems for large, multi-national customers and governments. IBM typically provides end-to-end solutions. The company now has four business segments: Software, Consulting, Infrastructure, and Financing. IBM had annual revenue of ~$60.5 in 2022.

IBM reported decent results for Q4 2022 on January 25, 2023. Company-wide revenue of $16,690M was flat from the prior year, while diluted adjusted earnings per share rose 7% to $3.60 from $3.35 year-over-year. Diluted GAAP earnings per share increased 15% to $3.13 in the quarter from $2.72 in the prior year.

Revenue for Software increased 3% to $7,228 from $7,087 in comparable quarters due to 10% growth in Hybrid Platforms & Solutions and a 3% increase in Transaction Processing. Revenue was up 15% for RedHat, 9% for Automation, 8% for Data & AI, and 10% for Security. Consulting revenue increased 0.5% to $4,770M from $4,746 due to a 7% rise in Business Transformation, 10% in Technology Consulting, and 12% in Application Operations.

The book-to-bill ratio was healthy at 1.1X. Revenue for Infrastructure was up 2% at $4,483M from $4,414M due to an 11% improvement in Hybrid Infrastructure and flat Infrastructure Support. Z systems were up 21%.

We project that IBM will see earnings-per-share grow 4.1% to $9.50 in 2023.

Click here to download our most recent Sure Analysis report on International Business Machines (IBM) (preview of page 1 of 3 shown below):


Dog of the Dow #3: Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is the largest retail pharmacy in both the United States and Europe. Through its flagship Walgreens business and other business ventures, the company employs more than 315,000 people and has more than 13,000 stores.

On March 28th, 2023, Walgreens reported Q2 results for the fiscal year 2023.

Source: Investor Presentation

Sales from continuing operations grew 3% over the prior year’s quarter. However, adjusted earnings-per-share slumped 27% year-over-year to $1.16 from $1.59, mostly due to high Covid-19 vaccinations in the prior year. Earnings-per-share was $0.05 ahead of estimates. The company has now beaten analysts’ estimates for eleven consecutive quarters.

Walgreens is facing difficult comparisons and has guided toward earnings-per-share of $4.45 to $4.65 for the fiscal year. At the midpoint, this would be a decline of almost 10% from the prior fiscal year.

Click here to download our most recent Sure Analysis report on Walgreens Boots Alliance (WBA) (preview of page 1 of 3 shown below):


Dog of the Dow #2: 3M Company (MMM)

3M sells more than 60,000 products that are used every day in homes, hospitals, office buildings, and schools around the world. It has about 95,000 employees and serves customers in more than 200 countries.

3M is now composed of four separate divisions. The Safety & Industrial division produces tapes, abrasives, adhesives, and supply chain management software as well as manufactures personal protective gear and security products.

The Healthcare segment supplies medical and surgical products as well as drug delivery systems. The transportation & Electronics division produces fibers and circuits with the goal of using renewable energy sources while reducing costs. The Consumer division sells office supplies, home improvement products, protective materials, and stationery supplies.

3M is facing several lawsuits, including nearly 300,000 claims that its earplugs used by U.S. combat troops and produced by a subsidiary were effective. These lawsuits are ongoing.

On January 24th, 2023, 3M reported fourth-quarter and full-year earnings results.

Source: Investor Presentation

For the quarter, revenue fell 5.9% to $8.1 billion, which was $10 million better than expected. The adjusted earnings-per-share of $2.28 compared to $2.31 in the prior year was $0.11 below estimates.

Organic growth for the quarter was 1.2%. Health Care, Transportation & Electronics, and Safety & Industrial grew 1.9%, 1.4%, and 1.3%, respectively.

3M provided an outlook for 2023, with the company expecting adjusted earnings-per-share of $8.50 to $9.00. On a comparable basis, adjusted earnings-per-share for 2022 was $9.88.

Click here to download our most recent Sure Analysis report on 3M Company (MMM) (preview of page 1 of 3 shown below):


Dog of the Dow #1: Verizon Communications (VZ)

Verizon Communications was created by a merger between Bell Atlantic Corp and GTE Corp in June 2000. Verizon is one of the largest wireless carriers in the country. Wireless contributes three-quarters of all revenues, and broadband and cable services account for about a quarter of sales. The company’s network covers ~300 million people, and 98% of the U.S. Verizon has now launched 5G Ultra-Wideband in several cities as it continues its rollout of 5G service.

On January 25th, 2023, Verizon announced fourth-quarter and full-year earnings for the period ending December 31st, 2022.

Source: Investor Presentation

For the quarter, revenue grew 3.5% to $35.3 billion, which was $160 million more than expected. Adjusted earnings-per-share of $1.19 compared unfavorably to $1.31 in the prior year but was in-line with estimates.

The company had postpaid phone net additions of 217K during the quarter, much better than the 8,000 net additions in the third quarter. Revenue for the Consumer segment grew 4.2% to $26.8 billion, driven by strength in equipment sales and a 5.9% increase in wireless revenue growth. Broadband had 416K net additions during the quarter, which included 379 fixed wireless net additions. Total retail connections of 143 million.

Verizon provided guidance for 2023 as well, with the company expecting adjusted earnings-per-share of $4.55 to $4.85 for the year. At the midpoint, this would be a 7% decrease from the prior year.

Click here to download our most recent Sure Analysis report on Verizon Communications (VZ) (preview of page 1 of 3 shown below):


Final Thoughts

Given the descriptions above, the Dogs of the Dow are clearly a very diverse group of blue-chip stocks that each enjoy significant competitive advantages and lengthy histories of paying rising dividends.

As a result, this investing strategy is a great, low-risk way for unsophisticated investors to approach dividend growth investing.

While it may not outperform the broader market every year, it is virtually guaranteed to provide investors with a combination of attractive current yield with steadily rising income over time.

If you are interested in finding high-quality dividend growth stocks and/or other high-yield securities and income securities, the following Sure Dividend resources will be useful:

High-Yield Individual Security Research

Other Sure Dividend Resources

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