The Dogs of the Dowis a well-known strategy first published in 1991 by Michael O’Higgins. The plan aims to maximize investment yields by purchasing the 10 highest-yielding dividend stocks from the Dow Jones Industrial Average each year. The highest-yielding stocks are also the lowest-priced stocks in the venerable average, as the lower a stock (or bond) is priced, the higher the attached yield or coupon becomes. There is an intriguing aspect to the highest-yielding dogs now, and it may provide the best contrarian dividend play for the fourth quarter and into 2026.
24/7 Wall St. Key Points:
- With all the major indices trading at or near all-time highs, a solid contrarian dividend idea makes sense now.
- The S&P 500 healthcare sector has experienced a 5% decline in 2025 and may offer some of the best dividend ideas for growth and income investors.
- The highest-yielding Dogs of the Dow are offering the best price entry point now and could be poised for a strong Q4 rally.
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With approximately$1.6 trillion in global sales, the pharmaceutical industry is a steadily growing sector driven by the rise of personalized medicine, the increase of chronic diseases, and an aging global population. At 24/7 Wall St., we have consistently believed that investing in the pharmaceutical industry offers our readers a range of potential opportunities. Plus, most across the investment world still consider the industry defensive, so it is not a bad idea, given the current market volatility.
We mentionthis, as three of the highest-yielding Dogs of the Dow are some of the top companies in the pharmaceutical/healthcare sector, and all three trade at bargain levels. The best part is that all three have very different business models and product silos, so you don’t duplicate exposure to the sector. The other two companies are perfect plays for a slowing economy where interest rates are poised to fall. All five of the dogs are rated Buy at top Wall Street firms.
Why do we cover the Dogs of the Dow?
Since the turnof the century, the Dogs of the Dow have significantly outperformed the overall Dow Jones Industrials and the Small Dogs of the Dow, which are the five highest-yielding stocks, even more. The fact that investors are buying the highest-yielding companies in the venerable index improves the chances for total return gains.
Verizon
Loading stock data...Verizon CommunicationsInc. (NYSE: VZ), commonly known as Verizon, is an American multinational telecommunications company that continues to offer tremendous value. It trades 9.13 times its estimated 2026 earnings, pays a 6.28% dividend, and is up almost 9% in 2025. Verizon provides a range of communications, technology, information, and entertainment products and services to consumers, businesses, and government entities worldwide.
Verizon’s interestcoverage ratio is 4.6× to 5× trailing 12 months, which offers more than enough cushion for dividend payments. With a very predictable revenue stream from telecom services, the company has less exposure to commodity cycles. In addition, the large scale helps in financing and absorbing shocks.
It operatesin two segments:
- Verizon Consumer Group
- Verizon Business Group
The Consumersegment provides wireless services across the United States through Verizon and TracFone networks, as well as through wholesale and other arrangements.
It also providesfixed wireless access (FWA) broadband through its wireless networks and related equipment and devices, such as:
- Smartphones
- Tablets
- Smartwatches and other wireless-enabled connected devices
The segmentalso offers wireline services in the Mid-Atlantic and northeastern United States through its fiber-optic network, Verizon Fios product portfolio, and copper-based network.
The Businesssegment provides wireless and wireline communications services and products, including:
- FWA broadband
- Data
- Video and conferencing
- Corporate networking
- Security and managed network
- Local and long-distance voice
Network accessservices to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally.
Goldman Sachshas a Buy rating and a price target of $49.
Chevron
Loading stock data...Chevron Corp.(NYSE: CVX) is an American multinational energy company that is predominantly specialized in oil and gas. This integrated giant is a safer option for investors looking to position themselves in the energy sector and pays a substantial 4.17% dividend, which was raised by 5% earlier this year.
Chevronoperates integrated energy and chemicals businesses worldwide through its subsidiaries and offers investors very strong credit ratings (AA), diversified operations, good margins, a long history of paying/dividends and raising dividends yearly. The company operates in two segments.
The Upstreamsegment is involved in the following:
- Exploration, development, production, and transportation of crude oil and natural gas
- Processing, liquefaction, transportation, and regasification associated with liquefied natural gas
- Transportation of crude oil through pipelines, and transportation, storage
- Marketing of natural gas, as well as operating a gas-to-liquids plant
The Downstreamsegment engages in:
- Refining crude oil into petroleum products
- Marketing crude oil, refined products, and lubricants
- Manufacturing and marketing renewable fuels
- Transporting crude oil and refined products by pipeline, marine vessel, motor equipment, and rail car
- Manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives
It also involvescash management, debt financing, insurance operations, real estate, and technology businesses.
Chevronannounced in late 2023 that it had entered into a definitive agreement with Hess Corp. (NYSE: HES) to acquire all of the outstanding shares of Hess in an all-stock transaction valued at $53 billion, or $171 per share based on Chevron’s closing price on October 20, 2023. Under the terms of the agreement, Hess shareholders will receive 1.0250 shares of Chevron for each Hess share. The transaction’s total enterprise value, including debt, is $60 billion. The Federal Trade Commission approved the deal last October, and it is expected to close this fall.
UBShas a Buy rating with a huge $197 target price.
Merck
Loading stock data...Merck & Co. Inc. (NYSE: MRK) develops and produces medicines, vaccines, biological therapies, and animal health products. Merck is not just a healthcare company but a global force in the industry. This healthcare giant is a no-brainer down over 30% over the last year while paying a solid 3.97% dividend.
The companyoperates through two segments:
- Pharmaceutical
- Animal Health
The Pharmaceuticalsegment offers human health pharmaceutical products in:
- Oncology
- Hospital acute care
- Immunology
- Neuroscience
- Virology
- Cardiovascular
- Diabetes
- Vaccine products, such as preventive pediatric, adolescent, and adult vaccines
The Animal Healthsegment discovers, develops, manufactures, and markets veterinary pharmaceuticals, vaccines, health management solutions and services, as well as digitally connected identification, traceability, and monitoring products.
Merckserves:
- Drug wholesalers
- Retailers
- Hospitals
- Government agencies
- Managed healthcare providers, such as health maintenance organizations
- Pharmacy benefit managers and other institutions
- Physicians
- Physician distributors
- Veterinarians
- Animal producers
Merck’s growth is a result of its efforts and strategic collaborations. The company works with AstraZeneca, Bayer, Eisai, Ridgeback Biotherapeutics, and Gilead Sciences to jointly develop and commercialize long-acting treatments for HIV, demonstrating a commitment to innovation and growth.
Goldman Sachs’target price objective is $94.
Amgen
Loading stock data...Amgen Inc.(NASDAQ: AMGN) discovers, develops, manufactures, and delivers human therapeutics worldwide. This biotech giant remains a top stock for investors to buy, offering a safer investment with a 3.38% dividend to capitalize on the massive potential growth in biosimilars. Amgen discovers, develops, manufactures, and delivers human therapeutics worldwide.
Amgenfocuses on:
- Inflammation
- Oncology/hematology
- Bone health
- Cardiovascular disease
- Nephrology
- Neuroscience
The company’sproducts include:
- Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis
- Neulasta reduces the chance of infection due to a low white blood cell count in patients with cancer
- Prolia to treat postmenopausal women with osteoporosis
- Xgeva for skeletal-related events prevention
- Otezla for the treatment of adult patients with plaque psoriasis, psoriatic arthritis, and oral ulcers associated with Behcet’s disease
- Aranesp to treat a lower-than-normal number of red blood cells and anemia
- Kyprolis to treat patients with relapsed or refractory multiple myeloma
- Repatha reduces the risks of myocardial infarction, stroke, and coronary revascularization
Goldman Sachshas a massive $405 target price, representing a substantial 41% upside from the current price.
Johnson & Johnson
Loading stock data...Johnson & Johnson(NYSE: JNJ) is a multinational American corporation specializing in pharmaceuticals, biotechnology, and medical devices. With shares trading at 14.5 times forward earnings and paying a 2.79% dividend, this diversified healthcare giant is a strong buy at current prices. Johnson & Johnson is among the most conservative of the major pharmaceutical companies with a diverse product portfolio and a familiar, solid brand. The company researches, develops, manufactures, and sells a range of healthcare products. Its primary focus is on products related to human health and well-being.
The InnovativeMedicine segment is focused on various therapeutic areas, including:
- Immunology
- Infectious diseases
- Neuroscience
- Oncology
- Pulmonary hypertension
- Cardiovascular and metabolic diseases
Productsin this segment are distributed directly to retailers, wholesalers, distributors, hospitals, and healthcare professionals for prescription use.
The MedTechsegment encompasses a diverse portfolio of products used in orthopedics, surgery, interventional solutions, cardiovascular intervention, and vision care. It also offers a commercially available intravascular lithotripsy (IVL) platform for the treatment of coronary artery disease (CAD) and peripheral artery disease (PAD).
Citigrouphas a Buy rating with a $200 price objective.
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