The Dogs of the Dow strategy doesn’t always work. Often, it can lead investors to a laggard poised to lag behind for yet another year. Still, screening the worst-performing (or highest-yielding) names within the Dow Jones Industrial Average (DJIA) can be a great way to uncover oversold blue-chip stocks that have gotten left behind.

Of course, you’ll need to put in the extra homework to ensure a sound turnaround plan will be in the works. When it comes to battered Dow laggards, there’s a lot more to it than picking up the cheapest names from the wreckage in any given year.

Indeed, there can be perks of going for deeper value options, especially at times of growing market optimism. In this piece, we’ll look at three Dow laggards that may be worth backing as they do their best to turn things around in 2025.

Verizon

Verizon (NYSE:VZ) didn’t have its worst year on record, but it didn’t do much in a year that saw the S&P 500 rise by more than 20%. Over the past year, VZ shares are down around 3%. With gains from the August-September relief rally now wiped out, dip-buyers have yet another reason to consider the long-time Dow underperformer.

The dividend yield is at a towering 7.1%, and the beta stands at a low 0.42, making it less likely to be rattled on one of those big down days for the S&P 500. Of course, that also means Verizon stock is likelier to sit out those big up days as well.

Either way, Verizon doesn’t have much expectation baked in at $38 and change. Shares go for 16.5 times trailing price-to-earnings (P/E) and 8.1 times forward P/E at these depths. Some of the more optimistic analysts, like those at TD Cowen, view VZ stock as a “catch-up trade” for the free cash flow growth potential over the longer term. I’m inclined to agree. The bar is low, the yield is high, and the longer term may not be all too bad.

Chevron

Chevron (NYSE:CVX) is an underwhelming big oil company that had an underwhelming 2024 with plenty of choppiness but not much to show on the front of returns — close to 0% gains, though there was that juicy 4.1% dividend yield. However, year to date, CVX stock has really heated up, surging close to 8%. Indeed, it’s just been two weeks, and the stock is a leading Dow performer.

How long can this last? That’s the big question. The company expects $6-8 billion in free cash flow growth next year as its projects finally bear fruit. Combined with recent strength in oil prices and a still-modest 17.4 times trailing P/E multiple, it’s hard not to like the setup for Chevron for 2025. The company is an efficient operator, with significant structural cost reductions ($2-3 billion) expected to be unlocked this year.

Sure, CVX stock is stuck in a multi-year consolidation channel, but 2025 could be the year one of the Dow’s bluest blue chips finally breaks out.

Johnson & Johnson

Johnson & Johnson (NYSE:JNJ) stands out as a relative laggard that could reward the patience of its investors sooner rather than later. The stock is down 10% over the past year thanks to a wide range of number of setbacks. Going into the new year, however, JNJ stock will have a fresh slate.  The stock boasts a nice 3.42% dividend yield alongside a number of catalysts that could help move the needle higher.

With a stacked drug pipeline and the intriguing recent acquisition of Intra-Cellular, the stage for future quarters could be set for a nice beat. Additionally, the company is exploring the potential behind AI agents for use in drug discovery. Undoubtedly, Johnson & Johnson seems like a heavily discounted innovator and stealthy way to play the rise of AI agents going into 2025.

At 13.6 times forward P/E, JNJ stock certainly stands out as one of the most compelling Dow laggards to buy on a turnaround. Whether it’s AI agents, acquisition potential, or the pipeline, there are a lot of potential drivers supporting the turnaround thesis.

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