Why it’s [Almost] Always Best to Invest in the Dogs of the Dow
One of the greatest investment opportunities are the Dogs of the Dow.
And while some analysts may write off the Dogs of the Dow theory as antiquated, it’s just not true at all. In 2011, there were up 16.3%. In 2012, they jumped 9.9%. In 2013, they returned 34.9%. In 2014, they returned nearly 11%.
In 2015, they did okay, returning just 2.6 %.
In 2016, the Dogs returned 16% on average. In 2017, the Dogs of the Dow returned 19% for the year. And in 2018, the Dogs of the Dow lost 4% on the year, but still outperformed the Dow Jones’ overall 6% decline.
2020 was an ugly year for the Dogs of the Dow, which was down 13%. But historically, that's the exception and not the rule.
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Plus, we have to remember that each of the Dogs also pays a healthy dividend, too.
As for 2021, the Dogs are are yielding the following returns (Source: Nasdaq.com)
IBM (IBM) pays a 5.18% dividend
Dow, Inc. (DOW) pays a 5.04% dividend
Walgreens (WBA) pays a 4.69% dividend
Verizon (VZ) carries a dividend yield of 4.27%
3M (MMM) carries a dividend of 3.22%
Cisco Systems (CSCO) has a dividend yield of 3.22%
Merck (MRK) has a dividend of 3.18%
Amgen (AMGN) pays a 2.78% dividend
Coca Cola (KO) has a dividend yield of 2.99%
The best part – it’s a “set it and forget it” strategy.
You simply buy the 10 biggest Dow flops of the year that pay respectable dividends. You buy at the start of the New Year, and exit at the end of the year. Then, you simply repeat it. While others may say it’s an antiquated strategy with low success rates, history proves that wrong.
Even options can be used to trade the Dogs every year. You’d simply invest in a long-dated options dated out to December or January of the following year, set it, and forget it.
At this pace, the Dogs of the Dow could again outperform the overall market.
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