Set it and Forget it: A Simple Strategy that Works Most Years

Barron’s once noted the Dogs of the Dow strategy “no longer works.”

That’s because “Companies have changed how they return cash to stockholders. Even if the strategy does retain a trickle of predictive power, a look at the stocks it’s likely to select for next year suggests they’re not especially dog-like, or cheap,” they noted.

However, since that article was published in 2013, the Dogs of the Dow has managed to produce respectable returns.  In 2013, for example, the Dogs of the Dow returned just under 35% average returns. In 2014, nearly 11%.  

In 2015, they did okay with an average of 2.5%. By 2016, 16%. In 2017, 19%.  In 2018, they eked out a 1% win, as the Dow lost nearly 6%.

For 2019, the Dogs of the Dow are off to the races.

·      IBM ran from $108 to $136 with a dividend yield of 4.77%

·      Exxon Mobil ran from nearly $65 to $69 with a yield of 5.05%

·      Verizon ran from $53 to nearly $60 with a yield of 4.14%

·      Chevron ran from $107 to $121 with a yield of 4.03%

·      Pfizer didn’t do too well so far, falling from $41 to $38.  PFE has a yield of 3.76%

·      Coca-Cola ran from $46 to $53 with a dividend yield of nearly 3%

·      JP Morgan Chase ran from $93 to $131 with a yield of 2.75%

·      Procter & Gamble ran from $87 to $121 with a yield of 2.46%

·      Cisco ran from $41 to $45 so far with a yield of 3.08%

·      Merck ran from $73 a share to $86 with a yield of 2.82%

While the 2020 Dogs haven’t been released to the hounds just yet, the strategy is simple.  You’re buying toe 10 top Dow dividend-paying stocks that fell out of favor at the start of the year.  You then cash out by the end of the year, and repeat.

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