New research by Dr. Stanley Coren of the University of British Columbia, retired psychology professor, shows that hugging a dog actually increases canine stress levels. Over two thousand photos were submitted by pet owners for a contest to identify the cutest dog. Many of these owners reported that their dogs love to snuggle and are cuddly, which translates to hugs in human terms. In fact, the dogs may not be enjoying the snuggles as much as we think, if at all. Dr. Coren reviewed a random sample from web photos of 250 pictures of people hugging their dogs. However, as Dr. Coren’s study reveals, dogs in these photos were showing signs of stress and anxiety, including looking away, closing their eyes or squinting, flattening their ears against their heads, yawning, raising a paw, or licking a person’s face. In fact, 81.6 percent of the dogs in the pictures he examined showed signs of stress. In the wild, a dog’s natural instinct when stressed would be to run, and being restrained in a hug from running adds to a dog’s stress level.
An important issue is that children often hug dogs and are told by their parents that it is alright to hug the dog. Often a child bitten in the face reports that he was hugging the dog. There is a popular book “Smooch Your Pooch” that encourages hugging dogs, and the American Veterinary Society of Animal Behavior strongly advises that parents not purchase this book for children.
This does not mean that we should not express love for our dogs. Stroking a dog’s fur, spending time playing with your dog, going for a walk or a slow “smell walk” are all ways to love your dog in ways she or he can understand. Learn to read your dog’s body language to see if he is 
enjoying a loose nonrestrictive hug. In the first picture here, Trystan is stressed–panting, ears back, posture tense, eyes white with worry, whiskers pulled back, brow furrowed–everything says he does not want a hug. In the second picture, he is smiling, looking at me, relaxed posture, eyes bright, ears up–I could put my arm loosely around him here and he would probably not feel stress.
Dogs continue to evolve–gazing at dogs once was believed to always increase stress levels as well, and recently we are learning that a soft gaze exchanged with a dog actually increases levels of oxytocin, the bonding and trust hormone, in both you and your dog.