The Dogs of the Dow theory suggests investors select the ten stocks that have the highest dividend yield from the stocks in the Dow Jones Industrial Index (DJIA) after the close of business on the last trading day of the year. Once the ten stocks are determined, an investor invests an equal dollar amount in each of the ten stocks and holds them for the entire next year.
With the first 10-months of the year nearly behind us, the Dow Dogs for 2015 are trailing both the Dow Jones Industrial Index and the S&P 500 Index on a price basis. The below table shows the performance of this year's Dow Dogs compared to the DJIA. For reference, the S&P 500 Index is up .79% through the market's close on Friday. The weak links in the Dow Dog strategy this year are the energy stocks, ExxonMobil (XOM) down 10.2% and Chevron (CVX) down 18.7%. The industrial stock Caterpillar (CAT) has also contributed to the underperformance as the stocks is down 21.6% YTD.
|From The Blog of HORAN Capital Advisors|
Source: Dogs of the Dow