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Dogs of the Dow

post #1 of 10
Thread Starter 

Dogs of the Dow is a strategy whereby you buy the top 10 yielding stocks in the Dow Jones every year, put equal balancing into them (10% of your money into each of the 10 stocks), and roll them over every year into the next batch of high yields.

 

The thinking behind this strategy is that these stocks have high yields because their prices have dropped, but since they are part of the respected Dow Jones index, they are probably still fundamentally sound (but this may not always be the case!)

 

For the year ending 2011, here are the highest yeilding Dow stocks:

 

For 2011, here are the Dogs of the Dow:

 

Symbol Company Price Yield
NYSE / NASDAQ The Dow stocks ranked by yield on 12/30/11 on 12/30/11 on 12/30/11  
T AT&T 30.24 5.82%
VZ Verizon 40.12 4.99%
MRK Merck 37.70 4.46%
GE General Electric 17.91 3.80%
PFE Pfizer 21.64 3.70%
DD DuPont 45.78 3.58%
JNJ Johnson & Johnson 65.58 3.48%
INTC Intel 24.25 3.46%
PG Procter & Gamble 66.71 3.15%
KFT Kraft 37.36

3.10%

 

There is an ETN which seeks to replicate the performance of these stocks, its ticker is DOD.

 

DOD has a 0.75% expense ratio which works against you, it also does not pay a dividend, but it will replicate the performance of owning these 10 stocks.

 

Here is DOD vs the S&P over the past two years:

 

 

big.chart?nosettings=1&symb=sp500&uf=0&type=4&size=3&sid=3377&style=330&freq=1&time=9&rand=1245857638&compidx=aaaaa%3a0&comp=dod&ma=0&maval=9&lf=1048576&lf2=4&lf3=0&height=665&width=720&mocktick=1
post #2 of 10

This sounds familiar. Is it a method laid out in a book by Michael O'Higgins?

post #3 of 10

Pretty interesting strategy.  I took a look at it last year and it seemed to be rather profitable. 

 

Interestingly enough,  my 92 year old great grandfather who still invests told me about the strategy!  If I recall correctly, he has been using it since around the 90s.  He is a strong proponent of it. 

 

http://www.dogsofthedow.com/ For being such a basic site, it delivers!

 

Good to see the strategy mentioned here thumbup.gif

 

 

post #4 of 10

ok if you could assign a breed to each one of those.. which one would be the pitbull and the tea cup Yorkie.. etc etc

note can only assign one breed per company..

post #5 of 10
Thread Starter 
Quote:
Originally Posted by mjoke View Post

ok if you could assign a breed to each one of those.. which one would be the pitbull and the tea cup Yorkie.. etc etc

note can only assign one breed per company..

 

Well, assuming its going to be a rough year for the markets, which of the dogs will be worst?

 

INTC, VZ and T might be in for some trouble, but its tough to argue with 5.8% yeild from T when the banks are paying you zero.
 

 

post #6 of 10

keep in mind that's only a 2 year period with ~10 stocks. that's hardly a good sample size. let's see how the next 3-5 years go. 

post #7 of 10

keep in mind that's only a 2 year period with ~10 stocks. that's hardly a good sample size. let's see how the next 3-5 years go. 

post #8 of 10

You can also check this (my) strategy out which has a similar name "Dogs of the Season", but is actually completely different. Its thread is here.

post #9 of 10

I agree with 'eatmyshorts'. it is custom to see longer duration behavior in order to decide, at leat 3 years and compare it with the last 60 months

post #10 of 10

Although the original poster only posted a chart of two years of data, the strategy has been around since the early 90s and the website has supporting data for more than 70 years.

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