Personal Finance Topics / Macroeconomic Trends and Risks
No. of Recommendations: 1
" The Dogs of the Dow Have Their Best Year Since 2019
This was a good year to be a Dog of the Dow—especially for dividend investors. The 10 highest-yielding stocks in the Dow Jones Industrial Average are notching their best year on an equal-weighted basis since 2019.
The stocks are up an average of 17.8% through Dec. 26, beating the Dow 30’s 14.5% gain. Healthcare giants Amgen and Johnson & Johnson and tech leaders IBM and Cisco each gained 28% to 44% this year.
Dividend-paying stocks, particularly ones with above-average yields, could keep outperforming in 2026, especially if the Federal Reserve cuts interest rates again. Long-term bond yields have tumbled from a high of 4.8% for the 10-year Treasury in January to 4.1% now.
The Dow dogs will probably change in the year ahead. Based on current dividend yields, IBM, Cisco, and McDonald’s would be out. Their replacements would be a trio of underperformers this year: Nike, UnitedHealth, and Home Depot.
Of the seven remaining stocks, Verizon and Chevron pay the biggest yields—6.7% and 4.6%, respectively. Verizon in particular looks attractive because it’s relatively cheap, too, trading at just 8.5 times 2026 earnings estimates.What’s Next: Investors can take comfort that the dogs pay reliable—and often very large—dividends, which should help provide steady income if bond yields head lower next year. That mix of proven income and potential rebound plays should keep the Dogs competitive in 2026.
—Paul R. La Monica and Janet H. Cho "
No. of Recommendations: 4
I don't think the Dogs of the Dow strategy is as much an argument for dividends, per se, as it is an argument for dividend yield as a valuation metric.
No. of Recommendations: 2
Verizon in particular looks attractive
This one is particularly hilarious. Verizon stock was $40 in 1997 ... and it's $40 now. ALL, every penny, of its return has come from the dividend. And it compares rather badly to the S&P500, and pretty much compares badly to many other decent choices of investment. I suppose AT&T might be a tiny bit worse than Verizon, but very similar idea.
Luckily I dumped my AT&T stock (IRR 8.43%) long ago and eventually replaced it with T-Mobile (IRR 21.3% to date).
No. of Recommendations: 6
I don't think the Dogs of the Dow strategy is as much an argument for dividends, per se, as it is an argument for dividend yield as a valuation metric.
Dividend yield works for the stock market in general as a valuation metric. I had AI generate a table of peak dividend yields followed by the next 10 year annualized return (keep in mind the dividend yield has been declining for many decades so the peaks keep getting smaller)
| Peak year | Peak dividend yield | Macro context | Next 10-year annualized total return |
| --------- | ------------------- | ------------------------------------ | ------------------------------------------------------- |
| **1932** | **~13–14%** | Great Depression bottom | **~15–17% / yr** |
| **1949** | ~7–8% | Post-war recession, industrial reset | **~14–16% / yr** |
| **1974** | ~5.5–6% | Oil shock, inflation, bear market | **~13–15% / yr** |
| **1982** | ~6% | Volcker disinflation peak | **~15–17% / yr** |
| **2009** | ~3.5–4% | Global Financial Crisis | **~13–15% / yr** |
| **2020** | ~2–2.5% | COVID shock | **~10–12% / yr** *(still incomplete but tracking high)* |
I don't know how actionable this is, but kinda interesting.
