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Dogs of the Dow hang close to overall market

The Dow Jones continues to trend higher, hitting fresh record highs as investor optimism remains strong.

Over the last few years we have been tracking the Dogs of the Dow strategy, but for the first time since we started following the strategy, our group of stocks this year have struggled to keep pace with the overall market.

The strategy involves buying an equal dollar weight of each of the top-ten yielding stocks in the Dow Jones at the start of the year, and holding the positions through the entire year regardless of individual performance. If the stock’s yields had risen too high because the stock was oversold, then it stands to reason that the underlying securities would rise faster than the overall market as traders bought into the undervalued position.

With less than three months to go, the ten stocks in this year’s group are running pretty close to break-even with the overall Dow Jones, once you include the dividend payments made during the year. Since the stocks have the highest yields in the Dow, the dividends play an important part in the overall performance of the group.

As it stands, the Dow Jones has appreciated 15.5% on the year. Collectively, the ten stock’s in this year’s group have risen 14.9%, so it is pretty even with the market.

The group has benefited from breakout performances by a couple of the stocks in the group, and just three stocks are trading in the red.

Let’s take a closer look at all ten, and see which are propping the group up, and which are pulling down the overall return.

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Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.