Barron’s once reported that the “Dogs of Dow Investing Strategy no Longer Works.”
Others have noted that research confirmed back in 2007 that the Dogs of the Dow is no longer a successful concept.
And still others argue investors are barking up the wrong tree with the theory.
While 2007 was flat, followed by a 38.8% decline in the Dogs for apparent subprime reasons, the Dogs have returned a gain every year since.
In fact, in 2009, they were up 16.9%. In 2010, they jumped 20.5%.
In 2011, there were up 16.3%. In 2012, they jumped 9.9%. In 2013, they returned 34.9%. In 2014, they returned 10.8%
In 2015, they did okay, returning just 2.6%.
So far, in 2016, we’ve seen steady upside in all of the 2016 Dogs, including Verizon, which jumped from $43 to $49 this year, and IBM, which soared from $130 to $165.
Chevron (CVX) jumped from $84 to more than $114. Wal-Mart (WMT) soared from $60 to $70, which leads us to believe the theory is alive and well.
While the 2017 list has yet to be issued, some likely Dogs for the New Year include Coca-Cola (KO), General Electric (GE) and McDonald’s (MCD).
You’re simply buying the highest yielding 10 Dow Jones stocks that fell out of favor, investing an equal amount in each, liquidating by January 1 of the following year, and repeating for nearly predictable rewards.