One of the best investment strategies involves the Dogs of the Dow.
Every January, you simply buy the top 10, most beaten down, high-yielding names on the Dow Jones, cash out by year-end, and repeat the process the following January. Throughout the year, investors can profit from price appreciation, and receive dividends from some of the top, down, but not out, names on the market.
In 2023, for example:
- Verizon (VZ) – which has a current yield of 7.1% — fell from about $38 to $37.49
- Dow Inc. (DOW) – with a yield of 5.07% — jumped from $49.99 to $55.23
- Intel (INTC) – with a yield of 1% – ran from $26.72 to $50.39
- Walgreens (WBA) – with a yield of 7.22% – fell from about $37 to $26.60
- 3M (MMM) – with a yield of 5.47% – fell from about $120 to $109.69
- IBM (IBM) – with a yield of 4.05% – ran from $140 to $163.75
- Amgen (AMGN) – with a yield of 3.12% — ran from about $258 to $288.46
- Cisco (CSCO) – with a yield of 3.09% — jumped from about $47.48 to $50.48
- Chevron (CVX) – with a yield of 4.03% — fell from about $176 to $149.77
- JPMorgan Chase (JPM) – with a yield of 2.47% — ran from about $134 to $170.30
Six out of 10 isn’t bad at all. Plus, investors got to collect some great dividends. Now, as we head into New Year 2024, some of the top Dogs of the Dow to consider include:
- Walgreens Boots Alliance (WBA), which yields 7.22%
- Verizon (VZ), which yields 7.1%
- 3M (MMM), which yields 5.47%
- Dow (DOW), which yields 5.07%
- IBM (IBM), which yields 4.05%
- Chevron (CVX), which yields 4.03%
- Amgen (AMGN), which yields 3.12%
- Coca-Cola (KO), which yields 3.13%
- Cisco (CSCO), which yields 3.09%
- Johnson & Johnson (JNJ), which yields 3.04%
Another way to potentially profit from the Dogs of the Dow is by buying long-dated call options on each. Many will allow you to buy a call out to January 2025.
Or, investors can jump into a Dogs of the Dow-like ETF, with the Invesco Dow Jones Industrial Average Dividend ETF (DJD). With an expense ratio of 0.07%, the DJD ETF weighs its holdings according to the dividend. While the DJD was just as volatile as the markets were in 2023, it did see a respectable gain, running from about $42 in January 2023 to $46.10 today.
It’s just something to consider if you’re looking for opportunities in the market.
