Investing Assets & Markets Mutual Funds Dogs of the Dow Mutual Fund Dividends Dogs of the Dow: Highest Dividend Paying Stocks By Kent Thune Updated on November 15, 2021 Reviewed by JeFreda R. Brown Reviewed by JeFreda R. Brown Facebook Instagram Twitter JeFreda R. Brown is a financial consultant, Certified Financial Education Instructor, and researcher who has assisted thousands of clients over a more than two-decade career. She is the CEO of Xaris Financial Enterprises and a course facilitator for Cornell University. learn about our financial review board Fact checked by Leila Najafi Dogs of the Dow: An investor's best friend?. Photo: CC0 Public Domain There a few mutual funds that invest in the Dogs of the Dow stocks. Contrary to what their name implies, these "dogs" tend to be among the best stocks for dividends. Rather than buy the 10 stocks that represent Dogs of the Dow, investors can buy a mutual fund that focuses on the same strategy. Key Takeaways The Dogs of the Dow are a group of the 10 highest-paying dividend stocks in The Dow Jones Industrial Average index.A contrarian investing strategy might have an investor looking for bargains on stocks, or "dogs," that may be positioned to have a good year.Mutual funds and ETFs that invest in the Dogs of the Dow do not hold 100% "dogs;" they typically represent around 50% or so of these funds' holdings.Investing in Dogs of the Dow mutual funds can be a good way for investors to gain access to value stocks while earning income. What Are the Dogs of the Dow Stocks? The Dogs of the Dow are a group of the 10 highest-paying dividend stocks in The Dow Jones Industrial Average index. Because price often moves in opposite direction as dividend yield, the Dogs of the Dow also have the distinction of being among the lowest performers in terms of price gain. Hence, the term "dogs." A contrarian investing strategy might have an investor looking for bargains on stocks, or "dogs," that may be positioned to have a good year. This is because a fundamental investing strategy is to buy stocks that are selling at a price that is below their respective valuation. However, a more widely applied use of the Dogs of the Dow is to capture the highest-yielding stocks for income purposes. Mutual Funds Investing in Dogs of the Dow There are only a handful of mutual funds and ETFs that invest in the Dogs of the Dow and none of them hold 100% "dogs;" they typically represent around 50% or so of these funds' portfolio holdings: Hennessy Balanced Fund (HBFBX): 50% of assets in the Dogs of the Dow, 50% in bonds Hennessy Total Return (HDOGX): 75% in the Dogs, 25% in bonds ALPS Sector Dividend Dogs ETF (SDOG): Starts with S&P 500 stocks and invests in the top dividend-paying names Investing in Dogs of the Dow mutual funds can be a good way for investors to gain access to value stocks while earning income. Also, dividend mutual funds can be wise alternatives to bond funds, albeit riskier, in low or rising interest rate environments. However, investors should be cautioned that they are concentrated within the value objective and may not be well-diversified. Bottom Line On a final note, investing strategies are like food diets: There is no "best investment strategy" except the one that works best for you. Mutual funds that hold Dogs of the Dow stocks can be used as a part of a diversified portfolio. If you want to buy mutual funds that pay dividends, Dogs of the Dow funds are not the only option. The leading factors in determining mutual funds selection are the appropriateness of the fund in the investor's objectives and the investor's risk tolerance. Whatever you choose, avoid launching a strategy only to abandon it for some hot new trend you discovered in a magazine article; stick to the time-tested basics. If it seems "too good to be true," it probably is so don't allow yourself to be distracted by flavors of the month. Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Kiplinger. "Dogs of the Dow 2021: 10 Dividend Stocks to Watch."