Last year, I published a post about the Dogs of the Dow Theory. Given we are fast approaching the end of 2016, I thought it would be a good time to take another look at how this strategy has performed over the past few years. As a reminder:
“The Dogs of the Dow is an investing strategy that consists of buying the 10 DJIA stocks with the highest dividend yield at the beginning of the year. The portfolio should be adjusted at the beginning of each year to include the 10 highest yielding stocks.” – Investopedia
The 2015 Dogs
Below is the list of stocks that made up the Dogs of the Dow for 2015 and how they performed. It was a bit of a mixed bag with CVX, CAT and XOM performing poorly but MCD and GE doing well. The rest were more or less in line with the Dow.
The 2016 Dogs
2016 has been a completely different story so far with all but 1 stock outperforming the Dow. Most of the stock in this year’s list have seen significant out performance. After disappointing last year, CAT is up almost 30%. MRK, CSCO and CVX have also performed well. Also, don’t forget these stocks also yield between 2% and 5% in dividends.
In the past, I have talked about adding options to the Dogs of the Dow strategy. The potential returns on some of the above stocks could have been bigger if an effective covered call strategy had been employed.
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Happy trading!
