The ‘Dogs Of The Dow’ approach

The Dogs of The Dow is an investing strategy that consists of buying the 10 stocks with the highest dividend yield out of the Dow 30 at the beginning of the year. The portfolio should be adjusted at the beginning of each year to include the 10 highest yielding stocks. It’s important to note that this is a long-term investment strategy. In the long run the average return of the Dogs should outperform the Dow-30

 

Dogs of the Dow for 2018

Since 12/29/2017 has been the last trading day of 2017, the Dogs of the Dow for 2018 can be determined. The criteria for choosing these new Dogs are simple:

  • The companies must be members of the Dow Jones Industrial Average, which has 30 member companies that are all blue chip stocks.
  • The Dogs of the Dow consist of the ten companies with the highest stock dividend yield on the last day of trading in a calendar year.
  • The Small Dogs of the Dow, are the five lowest-priced Dogs of the Dow.

The companies that make up the 2018 Dogs of the Dow and the Small Dogs can be found in the table below:

Dogs of the Dow 2018Compared to 2017, the 2018 list contains two new companies. Boeing (BA) and Caterpillar (CAT) were part of the 2017 Dogs list, while General Electric (GE) and Procter and Gamble (PG) make the 2018 list.

Dogs of the Dow Performance

In 2016, the DJIA closed out the year with a gain of 16.5%, while the Dogs were up 20.10%. The small dogs underperformed with a lower total return of 14.1%

However in 2017 the Dogs showed a lower return with 19.4% versus 22.50% of the DJIA.

Looking back over the years 2006-2017 the average annual return of the DJIA was 10.86% versus 12.09% for the Dogs of the Dow. The small dogs of the Dow are over time the best with an average annual return of 12.73%