10 'Dogs of the Dow' Dividend Stocks to Buy for 2023

Historically high inflation and rising interest rates have made blue-chip dividend stocks increasingly appealing for income investors over the past year. One conservative dividend investing strategy that has worked extremely well over the years is the “Dogs of the Dow” strategy. This simple investing formula involves buying the 10 highest-yielding stocks among the 30 components of the Dow Jones Industrial Average. It may seem basic, but the Dogs of the Dow have averaged an 8.7% annual total return since 2000, outshining the S&P 500’s 6.3% average return over the same period.

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Here are the 10 2023 Dogs of the Dow dividend stocks to buy, listed in reverse order of dividend yield through Jan. 11:

  • JPMorgan Chase & Co. (ticker: JPM)
  • Cisco Systems Inc. (CSCO)
  • Amgen Inc. (AMGN)
  • Chevron Corp. (CVX)
  • International Business Machines Corp. (IBM)
  • 3M Co. (MMM)
  • Dow Inc. (DOW)
  • Intel Corp. (INTC)
  • Walgreens Boots Alliance Inc. (WBA)
  • Verizon Communications Inc. (VZ)

JPMorgan Chase & Co. (JPM)

JPMorgan Chase is one of the largest diversified banks and global financial services companies. Rising interest rates can be good news for bank stocks because they boost net interest margins. Unfortunately, bank stocks underperformed in 2022 due to fears that an economic downturn would hurt loan growth. CFRA Research analyst Kenneth Leon says JPMorgan will continue to operate in a challenging environment in 2023, especially in the home and auto lending markets. Fortunately, JPMorgan investors get a 3% dividend. CFRA has a “hold” rating and $125 price target for JPM stock, which closed at $139.63 on Jan. 11.

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Cisco Systems Inc. (CSCO)

Cisco Systems designs and produces networking, security, application, collaboration and cloud technologies. The technology sector got hit particularly hard by the market sell-off in 2022, but CFRA analyst Keith Snyder says there are several reasons to like Cisco as a long-term investment, including tail winds from 5G deployments and Wi-Fi 6 upgrades. He says component shortages should subside in early fiscal 2023, and Cisco will continue to benefit from secular growth in bandwidth consumption and data center solutions demand. The stock also pays a 3.1% dividend. CFRA has a “strong buy” rating and $60 price target for CSCO stock, which closed at $49.21 on Jan. 11.

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Amgen Inc. (AMGN)

Amgen is one of the world’s largest biotechnology companies. Glickman says Amgen’s late-stage pipeline assets, including cancer treatment sotorasib and asthma therapy tezepelumab, are promising growth opportunities. Amgen has already received approval from the U.S. Food and Drug Administration for sotorasib in treating advanced non-small-cell lung carcinoma. Glickman says sotorasib will boost both revenue and profits for Amgen, but the company has guided for just mid-single-digit overall revenue growth through 2030. Glickman sees limited upside for Amgen at current levels. However, the stock pays an attractive 3.2% dividend. CFRA has a “sell” rating and $251 price target for AMGN, which closed at $272.91 on Jan. 11. Of course, the Dogs of the Dow strategy doesn’t concern itself with analyst ratings and forecasts, only the juiciness of the dividend yield.

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Chevron Corp. (CVX)

Chevron is one of the largest U.S. oil majors. The Russian invasion of Ukraine coupled with ongoing inflation in commodities sent energy prices soaring in 2022 and helped oil and gas stocks generate record profits and big returns for investors. Chevron reported impressive 49.2% revenue growth and 83.7% net income growth in the third quarter. CFRA analyst Stewart Glickman says Chevron’s valuation is reasonable at current levels and the company has several growth catalysts ahead. Chevron also pays a 3.2% dividend. CFRA has a “hold” rating and $188 price target for CVX stock, which closed at $175.20 on Jan. 11.

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International Business Machines Corp. (IBM)

IBM is a global technology company that provides enterprise software, infrastructure and services. Analyst David Holt says IBM’s sales numbers in recent quarters have been encouraging, and the company’s consulting business and separation of its Kyndryl Holdings Inc. (KD) managed-infrastructure business have helped offset ongoing weakness in IBM’s software business. IBM has guided for mid-single-digit revenue growth in 2023, but Holt says IBM remains a show-me stock at this point as sales from its mainframe refresh start to taper off. IBM pays a 4.7% dividend. CFRA has a “hold” rating and $146 price target for IBM stock, which closed at $145.26 on Jan. 11.

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3M Co. (MMM)

3M is a diversified global manufacturing company that produces products for a number of different end-markets, including industrials, manufacturing and health care. Analyst Colin Scarola says 3M shares have a “severely discounted valuation” relative to the S&P 500, but the stock is fairly priced given its long-term growth will likely lag the overall market. Scarola says most of 3M’s markets are mature and highly competitive, making it difficult for the company to generate significant volume growth or pricing leverage. Still, 3M shares pay a 4.9% dividend. CFRA has a “hold” rating and $122 price target for MMM stock, which closed at $129.12 on Jan. 11.

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Dow Inc. (DOW)

Rather appropriately, Dow Inc. is one of the current Dogs of the Dow heading into 2023. Dow is a global chemical company that produces polyolefins, chlor-alkali products, coatings and other products. Analyst Emily Nasseff says Dow is facing price and margin uncertainty among its commodity products in the near term, but strong consumer packaging demand and increased infrastructure spending are bullish longer-term trends for the company. CFRA projects sales will drop 9% in 2023 in a difficult macroeconomic environment. However, Nasseff says Dow has a healthy balance sheet and generates robust free cash flow that enables financial flexibility. The stock also pays a 5.3% dividend yield. CFRA has a “hold” rating and $47 price target for DOW stock, which closed at $57.58 on Jan. 11.

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Intel Corp. (INTC)

Intel is one of the world’s largest semiconductor producers. Intel shares are attractively valued relative to other chipmakers, but CFRA analyst Angelo Zino says Intel faces ongoing concerns about competitive pressures and foundry expansion plans. Zino says Intel’s foundry opportunity is “massive” given the Biden administration’s commitment to reduce reliance on chip suppliers in Asia. However, Zino predicts Intel will continue to lose server central processing unit (CPU) market share to Advanced Micro Devices Inc. (AMD) and Nvidia Corp. (NVDA) through at least 2024. Intel pays a 5.3% dividend. CFRA has a “hold” rating and $28 price target for INTC stock, which closed at $29.85 on Jan. 11.

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Walgreens Boots Alliance Inc. (WBA)

The next of 2023’s Dogs of the Dow is Walgreens Boots Alliance – a leading health care, pharmacy and drug store retailer in the U.S., Europe and Latin America. CFRA analyst Arun Sundaram says Walgreens shares have underperformed over concerns about the difficult macroeconomic environment and the long-term outlook for Walgreens’ consumer-centric health care segment. Sundaram says Walgreens is banking on its Walgreens Health business to be the company’s key growth driver, but the company does not anticipate the segment will be profitable until fiscal 2024. In the meantime, Walgreens investors can sit around and collect a 5.5% dividend just for owning the stock. CFRA has a “hold” rating and $38 price target for WBA stock, which closed at $37.12 on Jan. 11.

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Verizon Communications Inc. (VZ)

Verizon Communications is the largest U.S. wireless carrier and also provides wireline and broadband services. Verizon has been a disappointing investment as of late, generating a total return loss of 3.7% over the past five years. However, Verizon pays a 6.3% dividend, the highest yield of any stock in the Dow 30. While Verizon’s yield is attractive, Snyder says investors should take a cautious approach given risks associated with market share losses, Verizon’s $131 billion debt load and a difficult macroeconomic environment. CFRA has a “sell” rating and $30 price target for VZ stock, which closed at $41.18 on Jan. 11.

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