New Year’s Dow dogs revealed
By Dian Vujovich
I’m a fan of the Dogs of the Dow investment strategy. It’s simple and been known to reward investors no matter how much money they have to invest or what their level of investment acumen is.
Just to refresh: The idea behind investing in the dogs of the Dow is to purchase equal dollar amounts of the DJIAs highest yielding stocks on the first trading day of each new trading year and let that investment ride until selling the last trading day of the year.
In 2013, those dogs woofed out a better return than the DJIA by 8.4 percent bringing their total return to 35 percent, according to data from The Motley Fool.
While there are some pros who point out the dog strategy isn’t exactly a purebred one because the DJIA is a price-weighted index and the 10 dog selection only equal weights 10 stocks, so the performance comparison isn’t an apples-to-apples one. To that I say forget the nitpicking. The value of an investment strategy is in its performance return and the dogs have proven themselves to be good runners over time.
In 2011, for instance, the Dogs of the Dow beat the Dow by 6.8 percent, in 2012 they lost ground underperforming that index by 0.2 percent, but last year caught the big bone of 34.87 percent even beating out the S&P500’s 30 percent return.
So growl all you’d like about the technicalities, I’m betting the dogs could have a whopper of a year coming up.
Here’s the 2014 list of Dogs of the Dow beginning with the stocks that are the highest dividend yielders: AT&T, (T); Verizon (VZ); Merck (MRK); Intel (INTL); Pfizer (PFE): McDonald’s (MCD); Chevron (CVX); General Electric (GE); Cisco (CSCO); and Microsoft (MSFT).
Now go fetch, if you’d like.
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