The Top Reasons to Invest in the Dogs of the Dow Every Year

Ian Cooper
Ian Cooper
Cooper was among the few analysts to spot the financial crisis of 2008, the top of subprime and Alt-A, the death of Lehman Brothers, Bear Stearns, and New Century Financial, and even the Dow’s collapse to 6,500, as well as its recovery. He even called for gold to rally well above $1.500 when it traded under $600.

One of the top year-end strategies to consider is the Dogs of the Dow.

Not only does the strategy allow you to potentially profit from down and out Dow stocks, it allows you to collect respectable dividends, too.

Over the last six years, here’s how the Dogs did compared to the Dow Jones.

  • In 2015, the Dogs returned 2.6%, as the Dow returned 0.2%
  • In 2016, the Dogs returned 20.8%, as the Dow returned 16.5%
  • In 2017, the Dogs returned 23.7%, as the Dow returned 28.1%
  • In 2018, the Dogs returned about 1%, as the Dow fell 3.5%
  • In 2019, the Dogs returned 19.7%, as the Dow returned 25.3%
  • In 2020, the Dogs lost 12.7% of their value, as the Dow gained 7.2%

Plus, consider this.

“Coming into 2020, $10,000 invested in the Dogs at the beginning of the decade would have turned into about $40,100. For the overall Dow industrials, $10,000 would have become about $35,500. With 2020 returns added in, the Dow has the edge on the Dogs, at about $38,400 to $37,400,” as noted by Barron’s.

Even more attractive are the dividends.  For an idea, here’s how the Dogs of the Dow have performed since January 2021.

  • Chevon (CVX) ran from $82 to $112, and yields 4.78%
  • IBM (IBM) ran from $120 $126, and yields 5.2%
  • Dow (DOW) fell from $54 to $53, and yields 5.13%
  • Walgreens (WBA) ran from $40 to $48, and yields 3.96%
  • Verizon (VZ) fell from $57 to $53, and yields 4.81%
  • 3M (MMM) ran from $168 to $171, and yields 3.45%
  • Cisco (CSCO) ran from $44 to $60, and yields 2.46%
  • Merck (MRK) is at breakeven at $75, and yields 3.65%
  • Coca Cola (KO) ran from $52 to $57.50, and yields 2.92%
  • JP Morgan (JPM) ran from $123 to $152, and yields 2.63%

 

While we’re not sure of the 2022 Dogs of the Dow just yet, the strategy is easy.  Investors simply invest an equal amount among all 10 Dogs of the Dow at the start of the year, collect dividends throughout the year, close the positions by year end – and repeat.

 

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