In investing, simplicity is bliss. Dividend investors love the Dogs of the Dow strategy because it's so simple to use.
The Dogs of the Dow also have a reasonably good track record. As we saw last week, the Dogs have been able to beat the performance of the Dow Jones Industrial Average
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With investors hungrier than ever for dividend stocks, strategies that focus on maximizing income have become extremely popular. But with many high-yielding dividend stocks introducing substantial risks to investors' portfolios, many people prefer to limit their search to the highest-quality companies they can find. The 30 stocks in the Dow Industrials are certainly good candidates to choose from, with each company being a leader in its respective industry, and that's a big part of the draw of the Dogs of the Dow.
To summarize, picking the Dogs of the Dow is as simple as ranking the Dow 30 by dividend yield and taking the first 10. Let's look at the companies that are in the running to make the list for 2013.
Coming down the homestretch
At the very top of the list, it appears that the top two Dogs pretty much have the race sewn up, although which of the two will top the other is still uncertain. Both AT&T
What keeps the telecom giants near the top of the Dow Dogs each year is that both have business models that produce huge amounts of cash flow. Although it's extremely expensive to build and maintain their mobile networks, they nevertheless can pass through a large amount of that cash flow back to shareholders in the form of dividends. Even with solid advances so far this year, both stocks yield more than 4.5%.
Coming in at No. 3, though, is a stock that has vaulted up the Dog list for all the wrong reasons. Intel
You can also expect some changes. McDonald's
Conversely, General Electric
The Dog days are just beginning
Anything can happen in the next quarter, so the Dogs haven't finished their 2012 race yet. You can track the progress of two contenders, Intel and GE, by looking at The Motley Fool's latest premium reports on each. With ongoing updates, you won't get left out in the yard all night. Click here to read more about Intel, or to read our report on General Electric, click here.
Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. You can follow him on Twitter, @DanCaplinger. The Motley Fool owns shares of Intel and McDonald's. Motley Fool newsletter services have recommended buying shares of Intel and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.