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 2019
Since 12/31/2018 has been the last trading day of 2018, the Dogs of the Dow for 2019 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 2019 Dogs of the Dow and the Small Dogs can be found in the table below:
Compared to 2018, in the 2019 list JP Morgan (JPM) is replacing General Electric (GE).
Dogs of the Dow Performance
The performance of the DOW (-3.74%) and the S&P 500 (-4.57%) was negative in 2018. In 2018 the Dogs of the Dow showed a positive performance of 0.02% and the small dogs added of 0.81%. Both outperforming the Dow Jones Index with 3.76% and 4.55%.
From 1957 to 2003, the Dogs of the Dow strategy outperformed the Dow Jones index by about 3%. Between 1973 and 1996 the outperformance was even more impressive, about 4.5%. However nowadays the outperformance is dropping towards 1.5%-2% levels.
Dogs of the Dow Performance 2018
The performance of Dogs dividend stock over 2018 was above the 30 stocks of the DJI, however the results are mixed. 4 of 10 Dogs performed below zero. Health Care stocks Merck & Co (MRK) and Pfizer (PFE) performed well, General Electric dropped out the Dow Index and reported a dividend cut, resulting in an overall total return of -55.39%.