Verizon's 6% Yield and Nike's Recovery Lead July Dow Dogs

The Dogs of the Dow strategy has a straightforward premise: buy the ten highest-yielding stocks in the Dow Jones Industrial Average and hold for a year. This July, however, most of those names trade at high multiples and offer yields that barely top short-term Treasury rates. Two exceptions stand out.

Verizon is the only Dow stock that meets what the analyst calls the dogcatcher ideal. The annual dividend from $1,000 invested exceeds the price of a single share. The stock yields roughly 6%, backed by steady cash flow from its regulated telecom business. Its price-to-earnings ratio sits in the low teens, a wide discount to the broader market. For income-focused investors, Verizon is the safest pick in the current lineup, the author writes.

Nike does not fit the traditional high-yield mold. Its dividend yield hovered near 1.5% for years. The stock pulled back more than 20% from its 2023 high, pushing the yield closer to 2%. That is still low by Dog-of-the-Dow standards. The company's dividend growth record – 20 consecutive years of increases – makes the current entry point attractive for those prioritizing future income, the analyst notes. Nike's brand strength and global distribution network support the payout even as the company navigates slower demand in China and inventory adjustments in North America.

The broader risk the analyst identifies is that expensive stocks in the basket – McDonald's, Coca-Cola, Home Depot – could drag down the portfolio if the market rotates away from defensive consumer staples. Verizon and Nike face less exposure to that rotation. Verizon's valuation is compressed and its dividend acts as a floor. Nike's recent decline has already priced in much of the bad news, leaving less downside if the broader market weakens.

Dividend strategies have faced pressure this year with interest rates holding elevated. A broader stock market analysis shows that stock selection still matters. The analyst writes that the Dogs approach works best when you focus on the names offering a margin of safety on both price and income. Verizon and Nike, he argues, are the two names in the current Dow 10 that deliver that combination. Verizon's regulated cash flow and Nike's dividend growth record make them the strongest picks in a lineup that otherwise offers thin yields.