5 Dogs of the Dow To Buy This May

Granted, the 2024 Dogs of the Dow didn’t do so well. In fact, they lagged the Dow Jones by about 14 full percentage points. The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones Industrials.

The 2022 Dogs of the Dow beat the major indices, even in a rough year. While the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. 

And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The Dow Jones lost about 9%.

While the strategy involves buying the Dogs of the Dow at the start of January, there are a few still worth betting on as markets regain lost ground.

Verizon 

With a yield of 6.35%, oversold shares of Verizon (NYSE: VZ) are just starting to pivot higher.

After dropping from about $45.50 to $41.34, it’s just starting to push higher again. Last trading at $42.73, we’d like to see VZ initially retest its prior high.

Earnings weren’t too shabby.

In its first quarter, the company’s adjusted EPS of $1.19 beat expectations of $1.15. Total operating revenue jumped to $33.5 billion, which was slightly above analyst expectations for $33.3 billion. This growth was driven by wireless service revenue (which grew by 2.7% in the quarter) and broadband expansion.

Also, while the company lost 289,000 postpaid net phone subscribers — which was more than the 197,000 expected — it appears that negativity has been priced into the stock.

Merck 

With a yield of 3.8%, Merck (NYSE: MRK) hasn’t been this cheap since the middle of 2022.

But that’ll happen with disappointing guidance for 2025, a decline in sales of its Gardasil vaccine, concerns over the future of its blockbuster drug Keytruda, and tariffs.

However, with a good chunk of negativity now priced into Merck, it’s starting to show big signs of life again. Last trading at $85.13, we’d like to see it retest $95.

In addition, Merck now trades at 9x forward earnings with an undervalued PEG ratio of 0.76 – which is well below the sector average of 1.68.

Amgen 

With a yield of 3.3%, Amgen (NASDAQ: AMGN) is another incredibly oversold pharmaceutical stock.

After dropping from about $335.88 to a low of $270, it’s also starting to pivot from oversold conditions. From its last traded price of $288.41, we’d like to see it retest $335.88.

Fueling interest in the stock, Amgen is getting involved with obesity treatments.

The company will release Phase 2 trial results of its monthly weight loss injection treatment in June. If successful, it could significantly boost Amgen sales, with Goldman Sachs and JPMorgan arguing that GLP-1 drugs could be worth over $100 billion by 2030.

We also have to consider the company has a strong history of earnings growth.

While the company will release its next earnings report on May 1, a look back at its prior quarter shows strength.

According to Barron’s, “Fourth-quarter earnings, reported on Feb. 4, proved Amgen’s fundamental strength. Sales of $9.1 billion grew 11% year over year and beat expectations by a couple of hundred million dollars, driven by better-than-expected sales for legacy drugs that are on track to continue to generate billions in annual revenue.”

IBM

Oversold, but pivoting higher, IBM (NYSE: IBM) is just as attractive – especially with its 2.81% yield. Even better, IBM just raised its dividend to $1.68, which is payable on June 10 to shareholders of record as of May 9, 2025.

Plus, the tech giant also just saw its first insider buy for the year. On February 28, director David Farr paid $300,000 for 1,200 shares of IBM.

Even more exciting, IBM just announced plans to invest $150 billion in tech manufacturing, research, and development in the U.S. The company added that the investment will help accelerate U.S. production of quantum computers while boosting the economy.

Cisco

With a yield of 2.87%, Cisco (NASDAQ: CSCO) is also coming back strong.

Last trading at $57.19, we’d like to see it retest $62 initially.

Earnings have been solid here, too. The tech giant posted EPS of 94 cents, which was above expectations for 91 cents. Revenue of $14 billion was slightly above estimates of $13.9 billion.

“Cisco’s strong quarterly results were driven by accelerating customer demand for our technology,” Chief Executive Chuck Robbins said in a news release. “As AI becomes more pervasive, we are well positioned to help our customers scale their network infrastructure, increase their data capacity requirements, and adopt best-in-class AI security.”

It also raised its dividend to 41 cents, a 3% jump from the prior quarter. That was paid on April 23 to shareholders of record as of April 3. That was also the 18th consecutive year of dividend growth for the company.

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