Not much has changed since we last looked at this year’s Dogs of the Dow, with the stocks in our group still vastly outperforming the overall Dow Jones.
When we last looked at the stocks, the group had an average gain of 17.1% for the year. Since our last report, the average has risen modestly, and is currently up 17.3% year to date.
The Dow Jones is up a bit too, with the overall index rising from 5.7% to 6.0% since our last report in mid-July.
The overall market has been stuck in a sideways pattern, as Wall Street is unsure of the timing for future interest-rate hikes, the upcoming presidential election, and a lack of overall direction from the recent earnings season.
The Dogs of the Dow strategy involves buying an equal dollar weighting of the ten highest yielding stocks in the Dow Jones at the start of the year, and holding those positions, regardless of performance, through the entire year. The rationale is that the stocks’ yields have risen so high because the underlying security’s valuation has fallen too low, which in turn should lead to the stock rising more rapidly than the overall market, or at the very least falling less than the overall market in a down year.
The strategy has worked in the last few years, and continues to do well this year.
Let’s take a look at each of the stocks in this year’s group, all of which have outperformed the broader market, and see how each has contributed to the group’s overall performance.