Wednesday, September 21, 2011

Checking In On The Dogs Of The Dow

As I have noted in the past, one investment strategy that seems to garner press attention from time to time is the "Dogs of the Dow" investment strategy. The strategy consists of selecting 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 would invest an equal dollar amount in each of the ten stocks and hold them for a year.

The strategy has generated mixed results over the years; in 2010 and year to date this year, the strategy has been fairly effective. Last year the Dow Dogs returned 20.5% versus the Dow Jones Industrial Index return of 14.1%. Year to date through 9/21/2011 the Dogs of the Dow have returned .8% versus the DJIA return of -3.9%.

From The Blog of HORAN Capital Advisors

1 comment :

Pat S said...

I like this strategy. I don't advocate blindly buying the dogs, however. I like looking into the company's story, dividend yield, and historical dividend increases. That grants a better story and also allows investors to seek market outperformance.