Matty-Sways

8 stock picks from the "Dog"s of the Dow that have good dividends and decent upside, according to recent trends.

One of the simplest high-income plays investors can make is buying the "dogs of the Dow:" (the ten highest-yielding components of the Dow Jones Industrial Average).

"After solid returns from 2010-2018, the Dogs of the Dow got fleas," Stephen Suttmeier, technical research strategist for Bank of America, said. "2019 and 2020 marked the two worst years for the Dogs relative to the S&P 500 (SPX) going back to 2001."

Suttmeier says the "dogs" had some of their strongest runs coming out of recessions (following the last two recessions, the "dogs" had long runs of outperforming the S&P 500).

*"*If 2020 did indeed mark a big recessionary low like 2002 and 2009, the Dogs of the Dow could once again have their day," Suttmeier said. "The average annual total returns for the 5-year periods after these big lows were stronger for the Dogs of the Dow."

My edited list of the "dogs of the Dow" that I would recommend adding to your portfolio is below in no particular order.

1. 3M - symbol - (MMM)

Sector: Industrials

Dividend yield: 3.36%

Price target: $170

Upside to target: +0.2%

2. Merck - symbol - (MRK)

Sector: Healthcare

Dividend yield: 3.18%

Price target: $88

Upside to target: 4.7%

3. Verizon Communications - symbol - (VZ)

Sector: Communication services

Dividend yield: 4.28%

Price target: $64

Upside to target: +9.3%

4. Cisco Systems - symbol - (CSCO)

Sector: Information technology

Dividend yield: 3.22%

Price target: $50

Upside to target: +11.2%

5. Coca-Cola - symbol - (KO)

Sector: Consumer staples

Dividend yield: 2.99%

Price target: $56

Upside to target: +12.1%

6. Amgen - symbol - (AMGN)

Sector: Healthcare

Dividend yield: 3.1%

Price target: $275

Upside to target: +17.5%

7. IBM - symbol - (IBM)

Sector: Information technology

Dividend yield: 5.18%

Price target: $153

Upside to target: +18.6%

8. Chevron - symbol - (CVX)

Sector: Energy

Dividend yield: 6.11%

Price target: $116

Upside to target: +28.6%

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Economics, Finance and Investing

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