The 2020 Dogs of the Dow
Barron’s once reported that the “Dogs of Dow Investing Strategy no Longer Works.”
Others have argued that it’s no longer a successful trading theory.
But they may all want to do a bit more research because the Dogs of the Dow works very well.
History Proves the Dogs of the Dow Works
While 2007 was flat, followed by a 38.8% decline in the 2008 Dogs for apparent subprime reasons, the Dogs have returned a gain every year since.
In fact, in 2009, they were up 16.9%. In 2010, they jumped 20.5%.
In 2011, there were up 16.3%. In 2012, they jumped 9.9%. In 2013, they returned 34.9%. In 2014, they returned 10.8%
In 2015, they did okay, returning just 2.6%.
In 2016, the Dogs returned 16% on average. So, the idea that the theory is dead is laughable. In 2017, the Dogs of the Dow returned 19% for the year.
In 2018, the Dogs eked out a 1% gain, as the Dow lost 5.6% for the year, according to Forbes.
For 2018, the Dogs included:
Verizon ran from $50 to $55.07
IBM dropped from $149 to $113.67
Pfizer Inc. ran from $35 to $43.65
ExxonMobil fell from $81 to $68.19
Chevron fell from $124 to $108.79
Merck ran from $55 to $76.41
Coca-Cola ran from $43 to $47.35
Cisco Systems ran from $37 to $43
Procter & Gamble ran from $87 to $91.92
General Electric fell from $17 to $7.57
In 2019, the Dogs of the Dow failed to outpace the S&P 500 in a strong year for the markets.
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The Dogs of the Dow Strategy
You simply buying the highest yielding 10 Dow Jones stocks that fell out of favor, investing an equal amount in each, liquidating by January 1 of the following year, and repeating for nearly predictable rewards.
Even better, it's easy to use, and it performs well.
The way you pick the Dogs is very simple.
When the year starts, look at the top 10 yielding dividend stocks in the Industrials. Invest equal amounts of money in all 10 stocks. Then, hold onto those stocks throughout the year. At the end of the year, we do it all over again.
For 2020, the Dogs of the Dow are:
DOW (DOW)
Exxon Mobil (XOM)
IBM (IBM)
Verizon (VZ)
Chevron (CVX)
Pfizer (PFE)
3M (MMM)
Walgreens Boots Alliance (WBA)
Coca-Cola (KO)
JP Morgan Chase (JPM)
Cisco Systems (CSCO)
There are three ways to trade Dogs of the Dow.
One is to buy an ETF such as the ELEMENTS Dogs of the Dow (DODFX) ETF. A second way is to diversify among all 10 Dogs while collecting dividends from each. And a third way is to buy long-dated call options on each with a plan to hold for the full year.
The worst thing you can do is ignore the strategy.
While some argue it doesn’t work, history doesn’t lie.
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