The Dow Jones Industrial Average (^DJI -0.11%) gets a lot of criticism from academics and Wall Street professionals, who argue that its 30 stocks aren't really a representative sample of the best stocks in the U.S. market. Nevertheless, many investors follow the Dow and its constituents, especially because the blue-chip stocks you'll find there are among the best-known companies in the world.

2020 was a tough year for dividend investors who follow the Dow. New entrant has never paid a dividend, while longtime member Boeing had to suspend its dividend payouts. Moreover, those who follow the dividend-friendly strategy known as the Dogs of the Dow suffered a crushing blow, underperforming the overall Dow considerably. But investors are more optimistic about the Dogs of the Dow for 2021, and now, the stocks that made the final cut are here.

The 2021 Dogs of the Dow


Dividend Yield

Rank in 2020



















Cisco Systems



Merck (MRK 0.10%)



Amgen (AMGN -0.19%)






Source: Yahoo! Finance.

The simple way to find the Dogs of the Dow

Determining the Dogs of the Dow for each new year is easy: Just rank the Dow's 30 stocks by dividend yield and take the top 10. The strategy has investors buy equal amounts of all 10 stocks at the beginning of the year and then hold them through the end of the year. Then, if the components have changed, you sell the stocks that have dropped out and buy the new qualifying stocks.

As you can see above, most of the stocks in the Dogs of the Dow carried over from the 2020 list. A tough year for energy stocks pushed Chevron's share price down far enough for its dividend yield to rise to the top, and poor performance for Walgreens pushed it well up the list as well. The main reason there were any openings at all was that ExxonMobil and Pfizer were removed from the Dow 30 entirely.

Two dogs with smiles and sunglasses on a green grass lawn with toys nearby.

Image source: Getty Images.

2 new Dogs in 2021

It's only fitting that pharmaceutical giant Merck stepped into the No. 8 spot on the Dogs list for 2021. The company is an archrival of Pfizer's, and its stock underperformed both the Dow and Pfizer's own stock in 2020, pushing its dividend yield above the threshold. Merck's dividend yield reflects the ample cash flow from blockbuster drugs in its arsenal, but the company also faces similar pressures to Pfizer in keeping its pipeline of new treatments full. However, Merck is up to the task, and recent wins like the approval of cancer drug Lynparza in Japan have been welcome news.

Meanwhile, biotech pioneer Amgen is brand new to the Dow, adding another healthcare angle to the Dogs. A 5% drop in its stock price reflected the same lack of attention as most companies in the industry that didn't have a COVID-19 vaccine or treatment candidate in the headlines, but Amgen's long-term performance has been strong. Its prospects for 2021 are also encouraging, with blockbusters like osteoporosis fighter Prolia and immunosuppressant drug Enbrel carrying the weight as Amgen works on prospective treatments in high-value areas.

Can the Dogs of the Dow bounce back in 2021?

2020 was a horrible year for the Dogs, which ended the year down almost 13% compared to a 7% rise for the overall Dow. That made two years in a row of underperformance for the strategy, making some question whether it's really a smart way to invest.

However, the Dogs have a value investing orientation, and value investors in general got crushed in 2020. Relative performance between growth and value tends to run in cycles, though, and that gives investors hope that 2021 will be kinder to the kennel of Dog stocks.

For those looking for a simple investing strategy to generate dividend income, the Dogs of the Dow are worth a closer look. They won't always beat the market, but they'll give you the portfolio income you want and the top-name stocks that offer comfort and reassurance to even the most conservative of investors.