By now, I’m sure you’re familiar with the Dogs of the Dow…
You simply buy the top 10 of the cheapest Dow stocks with the highest dividends. The basic strategy suggests investing an equal dollar amount in each trade, cashing out at year-end and reinvesting in new Dogs by January 1.
While there are those that believe the strategy no longer works, here’s how the Dogs have historically performed.
- In 1996, they were up 29%.
- In 1997, they were up 22%.
- In 1998, they ran up 11%
- In 1999, they ran up another 4%
- In 2000, they were up 6.4%.
- In 2001, they were down 5% and down another 9% in 2002. However, both years outperformed the markets.
- In 2003, the Dogs had bark, returning 28.7%.
- By 2004, they ran up 4.4%, giving back 5% by 2005.
- By 2006, Dogs of the Dow ran up 30.3%.
- In 2007, the Dogs came in with flat returns.
- In 2008, they fell 38.8% as compared to the Dow's 31.9% loss.
- In 2009, they flew 16.9% higher as compared to the Dow's 22.7% rise.
- In 2010, the Dogs returned 20.5%.
- In 2011, they returned 16.3%. 2012 saw gains of 9.9%.
- In 2013, they returned another 34.9%. And in 2014, they returned 10.8%.
As for 2015, the Dogs had no bite.
With Caterpillar’s (CAT) decline, the average Dog is down about 4.7% on the year.
But given the long-term success of the strategy, the Dogs could do a lot better in the New Year. Some of those Dogs of the Dow 2016 could include Verizon (VZ), Chevron (CVX), Caterpillar (CAT), IBM (IBM), Merck (MRK), Procter & Gamble (PG). Wal-Mart (WMT) and Exxon Mobil (XOM)…