The Dogs of Dow Strategy: A History of Market-Beating Results
The Dogs of Dow strategy, created by Michael O’Higgins and detailed in his book “Beating the Dow,” has a long history of outperforming the market. Initially conceived for companies listed on the Dow Jones Industrial Average (DJIA), this strategy has proven to be successful beyond North America, extending to European stock market indexes as well. The methodology involves selecting the 10 companies with the highest dividend yield at the close of the last trading session of the year. These 10 companies are then equally weighted in a portfolio and held for the entire year.
Over the years, the Dogs of Dow strategy has consistently beaten the market and achieved better results. For example, from 1957 to 2003, spanning 46 years, this strategy demonstrated an average annual return of +14%, surpassing the Dow Jones’ average annual return of +11% during the same period. Even in more recent times, from 2010 to 2017, the strategy consistently outperformed the Dow Jones.
Why Investors Are Drawn to the Simplicity of the Dogs of Dow Strategy
One of the reasons why investors are attracted to the Dogs of Dow strategy is its simplicity and ease of execution. The strategy involves selecting the 10 highest dividend-yielding stocks and holding them for the entire year, without the need for frequent trading or complex analysis. This simplicity makes it accessible to a wide range of investors, including beginners and those who prefer a passive investment approach.
Furthermore, the strategy is based on the idea of buying undervalued stocks with high dividend yields. This can potentially lead to higher total returns, as the market may eventually recognize the value of these stocks and drive their prices higher. By focusing on dividend yield, the strategy also provides investors with a steady income stream from their investments.
Exploring the Stocks in the Dogs of Dow Strategy for 2024
Looking ahead to 2024, let’s take a closer look at some of the stocks that are part of the Dogs of Dow strategy. These stocks are chosen based on their high dividend yields and represent a diverse mix of companies from various industries. Here are the stocks and their respective dividend yields:
– Walgreens Boots Alliance (NASDAQ: WBA): 7.35%
– Verizon Communications (NYSE: VZ): 7.06%
– 3M Company (NYSE: MMM): 5.49%
– Dow (NYSE: DOW): 5.11%
– IBM (NYSE: IBM): 4.06%
– Chevron (NYSE: CVX): 4.05%
– Coca-Cola (NYSE: KO): 3.12%
– Amgen (NASDAQ: AMGN): 3.12%
– Cisco Systems (NASDAQ: CSCO): 3.09%
– Johnson & Johnson (NYSE: JNJ): 3.04%
These stocks represent a mix of established companies from various sectors, including healthcare, technology, consumer goods, and industrials. The high dividend yields indicate that these companies are currently undervalued based on their dividend payouts.
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An In-Depth Look at the Stocks in the Dogs of Dow Strategy for 2024
Now, let’s take an in-depth look at some of the stocks that are part of the Dogs of Dow strategy for 2024.
1. Walgreens Boots Alliance
Walgreens is a pharmaceutical company founded in 1909 and headquartered in Deerfield, Illinois. It currently offers a dividend yield of 7.35%. On March 12, it will pay a dividend of $0.25 per share. The company is expected to increase revenues by 2.08% in 2024.
2. Verizon Communications
Verizon Communications provides communications, technology, information, and entertainment products and services worldwide. It currently offers a dividend yield of 7.06%. The company is expected to release its accounts on January 23 and is projected to have a revenue growth of 1.5% in 2024.
3. 3M Company
3M is a diversified technology company that offers products and services in various areas, such as industrial equipment. It currently offers a dividend yield of 5.49%. The company is expected to present its numbers on January 23 and is projected to have an EPS increase of 7.7% and revenue growth of 3% in 2024.
4. Johnson & Johnson
Johnson & Johnson is a leading baby care products company founded in 1886 and headquartered in New Jersey. It currently offers a dividend yield of 2.93%. The company will pay a dividend of $1.19 per share on March 5. It is expected to have an EPS increase of 8.1% and revenue growth of 3.1% in 2024.
5. Cisco Systems
Cisco Systems designs, manufactures, and sells products related to the information and communications technology industry. It currently offers a dividend yield of 3.10%. The company will present its accounts on February 14. It has 28 ratings, including 9 buy ratings, 18 hold ratings, and 1 sell rating. The market estimate for its shares is around $53.97.
The above stocks reflect the diverse range of companies that make up the Dogs of Dow strategy. Each stock has its unique characteristics and potential for growth. By implementing the Dogs of Dow strategy, investors can gain exposure to these stocks and potentially outperform the market in 2024.
Disclaimer: This article is written for informational purposes only and does not constitute a solicitation, offer, advice, or recommendation to invest. Investing in stocks involves risks, and investors should do their own research or consult with a financial advisor before making any investment decisions.
Analyst comment
Positive news: The Dogs of Dow strategy has a long history of outperforming the market, even in recent times. Investors are drawn to its simplicity and the potential for higher total returns and steady income. The stocks in the Dogs of Dow strategy for 2024 represent a mix of undervalued companies from various sectors. Overall, the market is expected to be favorable for investors employing the Dogs of Dow strategy in 2024.
