The simple approach focuses on buying the 10 highest-yielding stocks in the Dow Jones Industrial Average at the beginning of each year and holding them for 12 months. Historically, the strategy has generated competitive returns, strong dividend income, and downside protection during volatile markets. 

After another solid showing in 2025, the Dogs of the Dow are once again proving their value in 2026, with several of this year’s top-yielding Dow components already posting impressive gains. Here’s a closer look at how the strategy performed last year, how it’s doing so far in 2026, and why income-focused investors continue to rely on this time-tested investing approach.

How the Dogs of the Dow Performed in 2025

For 2025, here’s how the Dogs of the Dow did.

• Verizon (NYSE: VZ) started 2025 at around $38. It ended the year at $39.44.
• Chevron (NYSE: CVX) from about $142 to $149.56.
• Johnson & Johnson (NYSE: JNJ) ran from $142 to $204.68.
• Amgen (NYSE: AMGN) ran from about $258 to $322.62.
• Merck (NYSE: MRK) ran from about $98 to $103.74.
• Coca-Cola (NYSE: KO) jumped from $61 to $68.99.
• IBM (NYSE: IBM) ran from about $215 to a $292.38.
• Cisco (NYSE: CSCO) ran from about $58 to $76.21.
• McDonald’s (NYSE: MCD) ran from about $293 to $301.88.
• Procter & Gamble (NYSE: PG) fell from about $264 to $141.24

That’s not bad at all.

Plus, once you factor in the yields for each, the Dogs outperformed the Dow Jones.

Dogs of the Dow Off to Strong Start in 2026

As for 2026, here’s how the Dogs of the Dow have performed to date.

• Verizon (VZ), which yields 6.51%, ran from $39.48 to a current price of $43.52.
• Chevron (CVX), which yields 4.2%, ran from $149.32 to $169.15.
• Merck (MRK), which yields 2.64%, ran from about $104.01 to $128.88.
• Procter & Gamble (PG), which yields 2.95%, ran from $141.04 to $147.81.
• Amgen (AMGN), which yields 2.8%, ran from $324.06 to $359.76.
• Coca-Cola (KO), which yields 2.57%, ran from $68.95 to $82.77.
• Nike (NYSE: NKE), which yields 3.98%, fell from $63.01 to $41.24.
• UnitedHealth (NYSE: UNH), which yields 2.22%, ran from $326.43 to $419.04.
• Home Depot (NYSE: HD), which yields 2.67%, ran from $338.61 to $348.76.
• Johnson & Johnson (JNJ), which yields 2.09%, ran from $204.55 to $256.24.

Why this Strategy Still Works

Historically, the Dogs of the Dow do very well.

The 2024 Dogs of the Dow underperformed the major indices in 2024. However, with dividends, investors still did well for the year.

The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones’ Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall.

The 2022 Dogs of the Dow beat the major indices, even in a rough year.

In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The S&P 500 lost 19%.  The Dow Jones lost about 9%.

In 2021, the Dogs of the Dow returned about 16.3%. While 2020 wasn’t a great year for the Dogs, most other years have done very well.  In 2019, the Dogs were up 20%.  In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%.  In 2017, the dogs were up 19%.  In 2016, they were up 16%.

The Long-Term Outlook

With several of the 2026 Dogs already delivering solid gains and continuing to pay dependable dividends, the strategy remains an appealing option for investors seeking income, stability, and long-term growth. As always, diversification and patience are key, but for those looking for a straightforward, historically successful investing strategy, the Dogs of the Dow continue to earn their place in a well-balanced portfolio.

At first glance, MRK stock doesn’t appear to have much direct relevance to the Iran war, which threatened to drag the world into a catastrophic depression. However, now that the Trump administration has signaled that it takes the threat of Iran bringing the global economy to its knees seriously, the worst-case scenario is apparently behind us.

Of course, we still must consider multiple variables in this situation. For one thing, both the U.S. and Iran can ultimately disagree on the performance of the underlying memorandum of understanding. If so, Trump may decide to pull the trigger again on military action. Further, Israel’s displeasure at the sudden peace agreement imposes a serious wrinkle on the discussion.

Still, if we were to take the deal at face value, the U.S. has decided that a prolonged conflict with Iran wasn’t worth the economic and societal damage that would likely erupt. As such, previously popular equities have seen a dramatic resurgence of demand — and that may pull public money due to the ‘FOMO’ effect.

It’s no secret that many astute investors would rather consider opportunities that haven’t attracted mass attention. After all, there’s always a risk that too much money going into one place may spark a bearish reaction as the weak hands blink first. That’s where MRK stock comes into the picture. At this point, with the spotlight focused squarely on artificial intelligence and other tech-related names, a company like Merck flies under the radar.

On a year-to-date basis, MRK stock is relatively pedestrian, gaining a little over 8%. Over the trailing month, the security has lost 7% of value, potentially making it an intriguing prospect under the presupposition of mean reversion theory.

Volatility Skew Offers Key Insights for MRK Stock

With a pharmaceutical company like Merck, much of its trading and investment prospect obviously lies with progress on its flagship pipelines. That’s not something that’s easy to predict. But in the interim of these disclosure cycles, we can potentially exploit its technical rumblings.

For options traders, one of the most useful tools to consider is the volatility skew. By definition, the skew showcases implied volatility (IV) across the strike price spectrum of a given options chain. Since IV represents the range of motion for a security at a select strike, a heightened volatility reading incentives traders to hedge the potential move.

In other words, the skew represents an insurance market. At any given moment, a popular security is liable to move either up or down. Since traders aren’t prescient, they must pay a protection premium so that they’re not caught out. Generally speaking, for mature equities, this premium is concentrated on put options, since there’s a greater risk of such stocks losing value quickly rather than vice versa.

Interestingly, though, for Merck stock, the skew features a pronounced “smile” that is unlike what you might usually find with blue chips. Basically, put IV for the near-term July 10 expiration date swings sharply higher at the right-side tail (lower strike price range). This dynamic possibly indicates that smart money traders are assigning at least some probability to a severe negative event.

Still, that’s not the only prominent characteristic of the skew. On the left-hand tail, call IV rises robustly for further out-the-money (OTM) strikes. When looking at this angle, traders are evidently paying a heightened premium for upside convexity.

Broadly speaking, the smart money wants to be protected from catastrophe but it also desires exposure to potential upside swings. More specifically, there’s not much insurance demand for “realistic” strikes or strikes near the plausible trading range of MRK stock. Instead, the protection is centered on the two tails.

To be fair, the skew isn’t necessarily pounding the table on either side of the trade. However, it’s only natural for traders to hedge against downside amid the current geopolitical environment. Fortunately, as cooler heads prevail over the Iran conflict, there’s now demand for enhanced upside. It’s this new framework which I believe speculators may be able to exploit.

Using an Inductive Model to Trade Merck Stock

While the volatility skew doesn’t offer a hard probability regarding future outcomes, we can use an inductive model — a Markov simulation to be precise — to forecast potential results. What aroused my attention to MRK stock is that, unlike other securities, it has suffered a significant slowdown in momentum. Again, under mean reversion theory, we may expect MRK to bounce back.

Notably, in the last 10 weeks, MRK stock has only printed three up weeks, leading to a downward slope. Under this 3-7-D sequence, over the next 10 weeks, the security has a median tendency of ranging between $112.50 and $120 (assuming a starting price of $113.87, Friday’s close). This distribution represents a sizable variance over a random 10-week long position, which would typically range between $113 and $115.50.

Even more enticing, over the next three weeks following a 3-7-D signal flashing, Merck stock has demonstrated a tendency of rising to approximately the $118 level (assuming the same aforementioned starting price). If this pattern were to materialize again, the 114/118 bull call spread expiring July 10 could be in play.

Basically, this trade requires MRK stock to rise through the $118 strike at expiration. If so, the maximum payout would be over 56%. The net debit per spread would be $256. Although this is a bit on the pricey side, you’d be trading a quality blue chip that is statistically stable, given its 60-month beta of only 0.21.

Dividend Aristocrats are widely considered some of the highest-quality companies in the market. To earn this title, a company must have increased its dividend payouts for at least 25 consecutive years. Dividend Kings take that standard even further. These elite companies have raised their dividends for 50 years or more, proving their resilience across multiple economic cycles.

What makes these companies particularly compelling is their ability to perform in virtually any environment. Whether facing inflation, recessions, rising interest rates, market crashes, or economic booms, they have consistently rewarded shareholders with growing income. That kind of durability is rare—and valuable. It also reflects strong management teams, disciplined capital allocation, and business models built to withstand long-term pressure.

Simply put, if a company can survive decades of economic uncertainty and still pay—and raise—dividends, it deserves attention.

There’s just one drawback: there isn’t currently a dedicated ETF focused solely on Dividend Kings. That means investors looking for exposure must either purchase individual stocks or turn to ETFs that emphasize similar high-quality, dividend-growing companies.

Here are three strong ETF options to consider.

A Pure Play on Dividend Aristocrats

The ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL) offers direct exposure to companies that have increased dividends for at least 25 consecutive years.

With an expense ratio of 0.35% and a yield of approximately 2.05%, NOBL tracks the S&P 500 Dividend Aristocrats Index. The fund focuses on stable, high-quality businesses with long track records of dividend growth—many of which have been increasing payouts for 40 years or more.

Its holdings include well-known companies such as Caterpillar (NYSE: CAT), Pentair (NYSE: PNR), AbbVie (NYSE: ABBV), Aflac (NYSE: AFL), General Dynamics (NYSE: GD), Clorox (NYSE: CLX), Walmart (NASDAQ: WMT), and Hormel Foods (NYSE: HRL).

These companies have demonstrated consistent performance and income reliability, making NOBL a strong choice for conservative, income-focused investors.

Low-Cost Exposure to High-Quality Value Stocks

Another solid option is the Schwab U.S. Large Cap Value ETF (NYSEARCA: SCHV), which focuses on large-cap value stocks.

SCHV stands out for its ultra-low expense ratio of just 0.04%, making it one of the most cost-effective ETFs available. It also offers a yield of about 1.85% and provides exposure to a diversified basket of financially strong companies.

Top holdings include Berkshire Hathaway (NYSE: BRK.B), Johnson & Johnson (NYSE: JNJ), Exxon Mobil (NYSE: XOM), JPMorgan Chase (NYSE: JPM), Home Depot (NYSE: HD), AbbVie, Pfizer (NYSE: PFE), and Merck & Co. (NYSE: MRK).

High Yield Meets Dividend Growth Discipline

The Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD) is another popular choice among income investors. With an expense ratio of 0.06% and a yield of roughly 3.5%, SCHD tracks the Dow Jones U.S. Dividend 100 Index. The ETF focuses on companies with strong fundamentals, sustainable dividends, and a history of consistent payouts.

Its holdings include industry leaders such as Amgen (NASDAQ: AMGN), AbbVie, Home Depot, Cisco Systems (NASDAQ; CSCO), Broadcom (NASDAQ: AVGO), Chevron Corporation (NYSE: CVX), United Parcel Service (NYSE: UPS), and The Coca-Cola Company (NYSE: KO).

SCHD is particularly appealing for investors seeking a blend of income, quality, and long-term growth potential.

Dividend ETFs Offer Stability in Any Market

In uncertain markets, stability and income become even more important. Dividend-focused ETFs—especially those emphasizing companies with long histories of growing payouts—can help anchor your portfolio.

These funds don’t just provide income—they offer exposure to businesses that have proven their ability to navigate inflation, recessions, and shifting interest rate environments. That kind of consistency can reduce volatility while still allowing for long-term capital appreciation.

While no ETF is exclusively dedicated to Dividend Kings, funds like NOBL, SCHV, and SCHD give investors access to many of the same high-quality characteristics: strong balance sheets, disciplined management, and shareholder-friendly capital allocation.

For investors looking to balance risk and reward, these ETFs can serve as a core portfolio holding—delivering both reliability and growth potential over time.

But let’s take a step back and ask why this is important.

After spending years building up your nest egg, you want to step into the retirement you deserve — whether that means relocating to a dream destination, traveling more, spending more time with family, or simply enjoying the comfort of your finances.

What you don’t want is constant stress about market swings, inflation quietly eroding your purchasing power, or the fear of outliving your savings.  You also don’t want to live on the scant 0.6% from your average savings account.

Collect 3.38% Every Quarter

One way to do that is by investing in a safe, high-yielding exchange traded fund (ETF), like the Schwab U.S. Dividend Equity ETF (NYSEARCA: SCHD). With an ultra-low expense ratio of 0.06%, the SCHD ETF tracks the total return of the Dow Jones U.S. Dividend 100 Index. The fund currently holds 101 dividend-paying stocks, including blue-chip names such as Bristol Myers Squibb (NYSE: BMY), Merck & Co. (NYSE: MRK), ConocoPhillips (NYSE: COP), Lockheed Martin Corp. (NYSE: LMT), Chevron (NYSE: CVX), Verizon Communications Inc. (NYSE: VZ), and Cisco Systems (NASDAQ: CSCO).

SCHD pays a quarterly dividend, making it a reliable source of regular income. It last paid out just over 27 cents per share on December 15. Before that, it distributed just over 26 cents per share on September 29 and just over 26 cents per share again on June 30. That kind of consistency is exactly what retirees need when planning monthly expenses.

The ETF is also up about 15% since the start of the year after a lackluster 2025. This is a reminder that dividend-paying ETFs can offer growth potential alongside income.

High Standards, Built-In Stability

What really sets SCHD apart from other dividend-paying ETFs is its strict eligibility criteria. To even be considered for inclusion, a company must have at least 10 consecutive years of dividend payouts, a market cap of no less than $500 million, and an average three-month daily trading volume of at least $2 million. In short, the ETF doesn’t accept any slouches. SCHD also favors companies carrying little to no debt, adding an extra layer of stability that matters when volatility picks up.

This disciplined, rules-based approach is one reason SCHD has earned a strong reputation among investors who prioritize quality over yield-chasing. Many dividend-paying ETFs simply sweep up the highest yields available without regard for financial health — SCHD takes the opposite approach, screening for durability first.

The SCHD ETF Will Rebalance in March

In just weeks, the SCHD ETF will also undergo its annual rebalancing. This time around, it’s again expected to rotate out of stocks with compressed yields and into stocks with higher yields, which should include stocks in the financial and healthcare sectors.

For investors keeping an eye on dividend-paying ETFs heading into the spring, this rebalancing could create a timely entry point. It offers a strong alternative. Owning a high-quality dividend ETF like SCHD can be a powerful step toward turning your hard-earned nest egg into lasting financial security.

A Smarter Alternative to Your Savings Account

The SCHD ETF has proven to be a reliable choice for those seeking income, stability, and long-term growth. And it provides all of that in a single, low-cost fund. For investors who want to replace the unreliable interest of a savings account with a consistent quarterly paycheck, without taking on excessive risk, SCHD offers a compelling alternative.

Owning a high-quality dividend-paying ETF like SCHD can be a powerful step toward turning your hard-earned nest egg into lasting financial security — and the kind of retirement you’ve actually been working toward.

The Strategy Behind the Dogs of the Dow

The Dogs of the Dow strategy is made up of two distinct parts. The first is to invest, and the second is to rebalance.

Part one: Invest equal amounts into the 10 highest-dividend-yielding stocks from the Dow Jones Industrial Average. Because the Dow Jones Industrial Average is widely regarded as a benchmark of the broader U.S. stock market, its component stocks represent the entire U.S. market. Furthermore, these are blue-chip stocks that are strong enough to withstand the test of time.

Part Two: Rebalance the portfolio every year into equal amounts of the 10 highest-yielding stocks in the Dow. The rationale for doing this every year goes back to research that indicates that, over the long term, the strategy generates higher returns then buying shares of an index fund tied to the DJIA, or even the S&P 500.

It’s a deceptively easy strategy, but it requires discipline. If this strategy appeals to you, here’s a cheat sheet to help you execute this strategy in 2026.

Dogs of the Dow: 2025 and 2026

For 2025, here’s how the Dogs of the Dow are doing with just days to go.

• Verizon (NYSE: VZ), which yields 6.85%, started the year at around $38. It’s now up to $40.
• Chevron (NYSE: CVX), which yields 4.54%, ran from about $142 to $150.50.
• Johnson & Johnson (NYSE: JNJ), which yields 2.5%, ran from $142 to $207.78.
• Amgen (NASDAQ: AMGN), which yields 3.02%, ran from about $258 to $334.
• Merck (NYSE: MRK), which yields 3.19%, traded between approximately $98 and $106.45.
• Coca-Cola (NYSE: KO), which yields 2.91%, jumped from $61 to $70.11 so far.
• IBM (NYSE: IBM), which yields 2.21%, ran from about $215 to a $304.56.
• Cisco (NASDAQ: CSCO), which yields 2.1%, ran from about $58 to $78.
• McDonald’s (NYSE: MCD), which yields 2.37%, ran from about $293 to $313.
• Procter & Gamble (NYSE: PG), which yields 2.93%, fell from about $264 to $144.50.

That’s not bad at all.

Plus, once you factor in the yields for each, the Dogs of the Dow outperformed the Dow Jones.

As for 2026, while the official list isn’t out just yet, here’s what’s likely to make the list.

• Verizon (VZ), which yields 6.84%
• Chevron (CVX), which yields 4.56%
• Merck (MRK), which yields 3.2%
• Procter & Gamble (PG), which yields 2.92%
• Amgen (AMGN), which yields 3.04%
• Coca-Cola (KO), which yields 2.92%
• Nike (NYSE: NKE), which yields 2.72%
• UnitedHealth (NYSE: UNH), which yields 2.68%
• Home Depot (NYSE: HD), which yields 2.64%
• Johnson & Johnson (JNJ), which yields 2.51%

A Strategy With a Proven Track Record

Historically, the Dogs of the Dow do very well for income-oriented investors.

• The 2024 Dogs of the Dow underperformed the major indices in 2024. However, with dividends, investors still did well for the year.
• The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones’ Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall.
• The 2022 Dogs of the Dow beat the major indices, even in a rough year.

In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The S&P 500 lost 19%.  The Dow Jones lost about 9%.

• In 2021, the Dogs of the Dow returned about 16.3%.
• In 2019, the Dogs were up 20%. 
• In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%. 
• In 2017, the dogs were up 19%.  In 2016, they were up 16%.

While 2020 wasn’t a great year for the Dogs, it wasn’t great for a lot of stocks for obvious reasons. However, most other years, the Dogs of the Dow have performed very well. 

Should You Buy the Dogs of the Dow in 2026?

The Dogs of the Dow remains one of the simplest income strategies available to retail investors, and its track record speaks for itself. While the strategy doesn’t outperform every year, the long-term results show consistent dividend income and competitive total returns, especially during volatile market cycles. With yields still attractive and several blue-chip names likely to appear on the 2026 list, the setup for the coming year looks compelling. As always, discipline and annual rebalancing are key. For patient investors who value simplicity and dependable dividends, the Dogs of the Dow remain worth serious consideration.

In fact, having traded the Dogs of the Dow since 2016, I can tell you it’s still a solid strategy with dividend payouts to boot.

For those of you who are new to the Dogs, it’s one of the easiest – and oftentimes most profitable strategies. You simply buy a basket of underperformers on the Dow that pay dividends, and sell by the end of the year. In most years, the Dogs do pretty well.

What makes the strategy attractive is that you’re buying the highest-yielding stocks on the Dow, which itself is made up of large, established, and financially stable companies. This selection process filters for reliability and lowers the risk of investing in a speculative venture. All you’re really doing is investing in temporarily beaten-down respected companies and collecting yield until the stock decides to rally back.

For those who are new to the Dogs of the Dow, it really is that easy.

A Proven Track Record

Let’s look at how the Dogs have done historically since 2016.

The 2024 Dogs of the Dow underperformed the major indices in 2024. However, with dividends, investors still did well for the year.

The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall. The 2022 Dogs of the Dow beat the major indices, even in a rough year.

In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The S&P 500 lost 19%.  The Dow Jones lost about 9%.

In 2021, the Dogs of the Dow returned about 16.3%. While 2020 wasn’t a great year for the Dogs, most other years have done very well.  In 2019, the Dogs were up 20%.  In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%.  In 2017, the dogs were up 19%.  In 2016, they were up 16%.

How Are the Dogs of the Dow Doing in 2025?

For 2025, here’s how the Dogs are doing.

• Verizon (VZ), which yields 6.68%, started the year at around $38. It’s. now up to $41.35.
• Chevron (CVX), which yields 4.51%, ran from about $142 to $151 so far.
• Johnson & Johnson (JNJ), which yields 2.57%, ran from $142 to $202.50.
• Amgen (AMGN), which yields 2.78%, ran from about $258 to $342.
• Merck (MRK), which yields 3.57%, slipped from about $98 to $95.
• Coca-Cola (KO), which yields 2.86%, jumped from $61 to $71.35.
• IBM (IBM), which yields 2.31%, ran from about $215 to a high of $291.
• Cisco (CSCO), which yields 2.09%, ran from about $58 to $78. 
• McDonald’s (MCD), which yields 2.44%, ran from about $293 to $304.
• Procter & Gamble (PG), which yields 2.87%, fell from about $264 to $147.

Eight out of 10 isn’t bad at all.

Conclusion

Not only do investors make a substantial amount of money year to date from the Dogs of the Dow stocks, but they also earn a good return on the dividends. Also, while the 2026 Dogs of the Dow list hasn’t been released yet, stay tuned. We’ll share that list with you once it’s officially out.