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 Jones Industrial Average (DJIA), an index of 30 large-cap U.S. stocks. 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.
A simple dividend strategy
To implement the Dog of the Dow strategy is simple, just take the amount of money you would like to invest in this strategy and then divide this equally over the 10 highest yielding stocks in the DJIA. Hold these stocks for a year and then at the end of 12 months, look at the 30 Dow stocks again and apply again the 10 highest yielding stocks rule.
Dogs of the Dow Performance in 2021 sofar
Based on the latest stock prices on August 12, 2021, three stocks are down for the year and the other seven 2021 dogs of the dow stocks did gain year to date.
The 7 leaders are:
- 3M
- IBM
- Chevron
- Coca-Cola
- Dow
- Walgreens Boots
- Cisco
The 3 laggards are:
- Amgen
- Verizon
- Merck & Co
The table below lists the year-to-date price performance and in addition, the charts show the total return of all ten dogs.
The 7 dogs of the dow and their total return that gained year-to-date:
The 3 dogs of the dow that dropped in 2021:
The Dow Jones Index returned 17.17% year-to-date. Most of the “leaders” are close to or above this performance only Coca-Cola (KO) is behind with 5%. The average performance is 12.90% for all ten dogs stocks combined. This is an underperformance. However, on June 30, the Dogs-of-the-dow YTD performance was 15.2% versus 13.8% for the index. One of the reasons for the current underperformance is the 8+% drop of Amgen last month.
See for the latest performance our dogs of the dow tracker.
The 10 Highest Yielding Dow 30 Stocks
The Dow Jones Industrial Average consists of 30 blue-chip stocks. For dividend investors, this is an interesting list, since 27 of the 30 companies pay a dividend. Many stocks are able to increase their dividend for several consecutive years. The top-yielding Dow stocks all have dividends that are well above average yields in the stock market.
On August 31st, 2020 the composition of the Dow-30 has changed for the last time: Exxon Mobil (XOM), Pfizer (PFE), and Raytheon (RTX) were replaced by Salesforce (CRM), Amgen (AMGN), and Honeywell (HON).
The average dividend yield for the Dow-30 is 2.13%, which is already a good rate. Also, the average number of consecutive years of dividend increases is high with 22 years. Getting close to the dividend aristocrats’ status.
The list of the current Dogs of the Dow based on the new index composition is below, along with the current (August-2021) dividend yield of the top-ten yielding DJIA stocks.
Final Thoughts
Some closing thoughts, dividend stocks, and the Dogs of the Dow strategy are interesting starting points for dividend investors. However, this popular investment strategy that prioritizes high dividend yields is struggling to keep up with the Dow Jones Index and outperform the index.
