The strategy of picking the Dogs (or highest-yielders) of the Dow Jones Industrial Average in any given year is certainly not a formula for achieving market-beating results. This is known as the Dogs of the Dow strategy.

Indeed, Mr. Market has marked down many a handful of the Dow plays for some pretty legitimate reasons. There may be profound industry headwinds overlooked by dip-buyers. Or perhaps the Dow dog is experiencing a loss of its durable competitive advantage or economic moat.

Either way, value investors must ensure that their Dow dog stock picks still have sound long-term fundamentals. Otherwise, their portfolio results could get nipped as the seemingly undervalued plays prove fair-valued or, worse, overvalued.

Let’s examine three underperforming Dow stocks that, while not official Dow dogs, may present decent value for investors who seek it in this scorching-hot stock market that some may fear will end in a correction, one that may hit sooner rather than later.

Verizon (VZ)

At a mere $40 and change per share, Verizon (NYSE:VZ) stock is the smallest member of the share price-weighted Dow Jones index. It’s also one of the most yield-heavy plays of the batch, with a remarkable 6.63% dividend yield at the time of writing. Undoubtedly, the former “Warren Buffett” play has been under some serious pressure in recent years, with shares shedding around half of their value as shares bottomed in October 2023.

Of late, VZ stock has been on the mend, with shares up over 30% since last year’s lows. It’s hard to imagine that Verizon’s dividend yield was even higher just a few short months ago. Though there are no guarantees that the depths of last autumn won’t be revisited, I continue to view Verizon as one of the more intriguing value plays in the Dow basket.

Price hikes helped the telecom fare better in its latest quarter, and with newfound momentum in the stock, it’s certainly becoming hard not to be enticed by the Dow dog and its dividend. At 14.6 times trailing price-to-earnings, VZ stock is a top dog to watch.

Chevron (CVX)

Chevron (NYSE:CVX) is another Dow stock that had investment from Warren Buffett’s firm Berkshire Hathaway (NYSE:BRK.B, NYSE:BRK.A) in recent years.

Today, Berkshire owns a 6.8% stake in the company, at least as of the latest quarter. Though there’s no denying Berkshire’s bullish view of the American oil patch (Buffett himself had a bit to say about oil in his latest letter to shareholders), the lack of momentum in shares of Chevron may be a concern to some of the less patient investors out there.

Chevron stock has been consolidating since peaking back in the first half of 2022. Now down just over 17% from its high, Chevron sports a 4.3% dividend yield and is now one of the higher-yielding players within the Dow.

At 13.38 times trailing price-to-earnings, the $282 billion oil giant stands out as one of the bluer blue chips in the Dow basket. For investors seeking a bountiful way to play the oil patch, CVX stock seems to be a must-watch right here.

IBM (IBM)

IBM (NYSE:IBM) stock was stuck in a multi-year bear market before its latest parabolic surge caught the attention of tech investors everywhere. With shares closing in on new highs, IBM stock is more of a top dog than a traditional Dow dog.

Undoubtedly, IBM has struggled to sustain growth in recent years, even though it has been investing heavily in its AI efforts. Until now, such AI investments have been shrug-worthy for those who had no idea how the technology could be monetized. These days, it’s all about AI. And as the AI revolution unfolds, perhaps it’s time to get back into IBM stock as it shows us all that it’s a tech company that can still innovate.

With IBM’s foundation models (think Watsonx, which launched just last year) aimed at enterprises looking to harness the power of AI, the company has the means to grow again. And with every exciting AI offering IBM unveils, expect investors to be more willing to pay a higher multiple.

With a solid 3.46% dividend yield and a mild 24.27 times trailing price-to-earnings ratio, IBM stock looks like a growth bargain that can also be relied on for passive income. Recent job cuts in the marketing and communications department may also signal the firm’s about to undergo a year of efficiency.

On the date of publication, Joey Frenette held shares of Berkshire Hathaway (Class B) The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.