There are mechanical strategies in the stock markets that select securities according to a fixed rule, without forecasts or technical analysis. The best known of all is the Dogs of the Dow, which every January buys the ten Dow Jones stocks with the highest dividend yield. In 2026, the basket is up +16.40% versus the index’s +10.80%, and it can also be replicated using RWA tokens.
The Dogs of the Dow and the RWA Tokenization Sector
The Dogs of the Dow strategy, literally the dogs of the Dow, was made famous by American fund manager Michael O’Higgins in 1991. On the last day of the year, the dividend yield is calculated for each of the thirty Dow Jones companies—that is, the annual dividend divided by the price. The ten stocks with the highest ratio enter the portfolio with equal weighting and remain unchanged until the following December 31. The Small Dogs variant takes the five lowest-priced stocks among the ten and requires a smaller investment.
The Ten Dogs of the Dow for 2026 Rank Merck First and Nike Last
The 2026 basket comprises equal positions in Verizon, Chevron, Merck, Procter & Gamble, Coca-Cola, Amgen, Nike, Home Depot, UnitedHealth, and Johnson & Johnson. The table shows closing prices on December 31, 2025, and August 28, 2026, starting with the dividend yield that determined the selection. Merck, Chevron, and Amgen occupy the top positions, while Home Depot and Nike bring up the rear in negative territory. The percentages represent price changes and do not include dividends received.
| Stock | Price 12/31/2025 | Dividend yield | Price 08/28/2026 | Performance |
|---|---|---|---|---|
| Merck | $105.26 | 3.23% | $148.35 | +40.90% |
| Chevron | $152.41 | 4.49% | $201.86 | +32.40% |
| Amgen | $327.31 | 3.08% | $432.42 | +32.10% |
| Johnson & Johnson | $206.95 | 2.51% | $268.04 | +29.50% |
| Coca-Cola | $69.91 | 2.92% | $89.66 | +28.30% |
| Verizon | $40.73 | 6.78% | $50.10 | +23.00% |
| UnitedHealth | $330.11 | 2.68% | $392.95 | +19.00% |
| Procter & Gamble | $143.31 | 2.95% | $143.78 | +0.30% |
| Home Depot | $344.10 | 2.67% | $330.19 | -4.00% |
| Nike | $63.71 | 2.57% | $39.60 | -37.80% |
The Dow Jones contains Nvidia, Microsoft, Apple, Amazon, and Salesforce, but none of them passes the dividend filter because their prices are too high relative to their dividends.
The Dogs of the Dow Beat the Dow Jones and the S&P 500
The portfolio of the ten Dogs is up +16.40% year to date, while the Dow Jones stands at +10.80%. Over the same period, the S&P 500 is up +11.65%, so it too remains below the dividend-based selection. The Small Dogs—Verizon, Nike, Coca-Cola, Merck, and Procter & Gamble—are instead up +10.90% and do not beat the index.
Replicating the Dogs with RWA Tokens Is Possible but Illiquid
On Ondo Stocks, a platform with more than 438 tokenized securities, all ten Dogs are available in tokenized form. Three are missing from Backed’s xStocks, distributed by Kraken—Verizon, Amgen, and Nike—so the complete basket cannot be built there. A liquidity issue must also be highlighted. Verizon’s token on Ondo has a market capitalization of $11,000, with 245 tokens in circulation, while Nike’s has a market capitalization of $1.28 million.
Ondo distributes $3.60 billion, but almost all of it is held in bond funds rather than tokenized stocks. The equity portion is dominated by Circle, S&P 500 ETFs, Micron, and Nvidia, while none of the ten Dogs appears on the first page.
Moreover, with low liquidity, the spread risks consuming a substantial portion of the dividend. The dividends also do not arrive in cash but are reinvested in the token, meaning that the original strategy’s dividend payment disappears. Access also remains an issue, because Ondo and xStocks are reserved for non-U.S. investors, and in Europe a tokenized stock remains a financial instrument under MiFID II.
