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Is keeping dogs permissible?
It is important to remember that Islam values compassion towards all animals, including dogs. Muslims are encouraged to treat animals with kindness and respect and to ensure that they are not mistreated or harmed in any way. Is keeping dogs permissible, should be answered in context of this principle of compassion.
Some people claim on the basis of a certain incomplete or abridged Hadiths that Islam orders to kill the dogs wherever they are found. For example they quote the following Hadith:
It was narrated that Az-Zuhri said:
"Ibn As-Sabbaq said: "Maimunah (May Allah be pleased with her) told me that Jibril, peace be upon him, said to the Messenger of Allah (Peace be on him) 'We (Angles) do not enter a house in which there is a dog or a picture, The next day the Messenger of Allah (Peace be on him) commanded that all dogs be killed, even small dogs."'
The following Hadith (reported by Ibn Mughaffal) suggests that the initial order to kill all dogs was later modified or abrogated on the request of the people. The Prophet Muhammad (peace be upon him) then allowed the keeping of dogs for specific purposes, such as hunting and guarding herds.
Ibn Mughaffal (May Allah be pleased with him) reported:
The Messenger of Allah (Peace be on him) ordered killing of the dogs, and afterwards said: What about them, i. e. about other dogs? and then granted concession (to keep) the dog for hunting and the dog for (the security) of the herd, and said: When the dog licks the utensil, wash it seven times, and rub it with earth the eighth time.
Narrated 'Abdullah bin Mughaffal (May Allah be pleased with him):
"I was one of those who held up the branches from the tree away from the face of the Messenger of Allah (Peace be on him) while he was delivering the Khutbah (sermon) saying: 'If it were not that dogs were a community among communities, then I would order that they be killed. So kill every one among them that is all-black. There is one inhabiting a home in which they keep a dog but their deeds are decreased by one Qirat every day - except for a hunting dog, or a farm dog, or a sheep dog.'"
It is not a far-fetched idea that the order of killing dogs altogether was abrogated and later restricted to a certain type of dogs, that is considered vicious. Jabir ibn Abdullah (May Allah be pleased with them) clearly mentioned that order of killing dogs altogether was abrogated.
Narrated Jabir ibn Abdullah (May Allah be pleased with them):
The Prophet of Allah (Peace be on him)) ordered to kill dogs, and we were even killing a dog which a woman brought with her from the desert. Afterwards he forbade to kill them, saying: Confine yourselves to the type which is all-black.
It was narrated that Abu Dharr (May Allah be pleased with him) said:
“I asked the Messenger of Allah (Peace be on him) about the all-black dog and he said: ‘(It is) a devil.’”
In ancient Arabia, dogs were commonly used for several purposes, including hunting, guarding, and herding. Dogs were highly valued for their abilities to track game and protect their owners and their property.
Imam Al-Nawawi said:
“There is a difference of opinion as to whether it is permissible to keep dogs for purposes other than these three, such as for guarding houses and roads . The most correct view is that it is permissible, by analogy with these three and based on the reason that is to be understood from the hadith, which is necessity.” 
However, keeping dogs just for recreation and passing time is not allowed, because it increases the chances of being polluted due to unclean saliva of dogs.
Allah knows the best.