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 2020

Since 12/31/2019 has been the last trading day of 2019, the Dogs of the Dow for 2020 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 2020 Dogs of the Dow and the Small Dogs can be found in the table below:

Dogs of the dow 2020

Compared to 2019, the 2020 list contains three new companies. Dow Inc. (DOW), 3M (MMM) and Walgreens (WBA) made the 2020 list. These companies replace JP Morgan Chase (JPM), Procter & Gamble (PG) and Merck & Company (MRK).

Dow Inc. is a spinoff of DowDuPont, which it replaced in the DJIA on April 2, 2019. 3M and Walgreens ended 2019 in red with respectively -7.4% and -13.7%. 3M and Walgreens are also both dividend aristocrats.

See for the latest performance our dogs of the dow tracker

Dogs of the Dow Performance

In 2019, the Dogs of the Dow strategy underperformed both the S&P 500 and DJI. The 10 Dogs of the Dow ended 2019 with a performance of 19.67%. Which is -2.67% below the DJIA  performance 22.34%. The “small Dogs of the Dow” had a difficult year and ended up just 9.71%.

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 1.2%-2% levels.

Dogs of the dow performance per year

Dogs of the Dow Performance 2019

In 2019, out of the 10 Dog stocks, 9 showed a positive total return over 2019, and just one was on the negative side. Especially, the small Dogs of the Dow had a difficult year and ended up just 9.71%. The table below lists the 10 dogs of the dow stocks, including the annual 2019 price performance and total return.

Dogs of the dow past performance