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The 2019 Dogs of the Dow Results

Written by Donnie Nguyen

January 9, 2020

Dogs of the Dow Investment Strategy

The Dogs of the Dow is a stock investing strategy popularized by Michael B. O’Higgins in his 1991 book, Beating the Dow. For more about the Dogs of the Dow (and Puppies of the Dow), I recommend reading his 2011 revised edition of the book. The 3 primary strategies in the book are Dogs of the Dow, Puppies of the Dow, and Penultimate Profit Prospect (PPP). In this article, I briefly explain the 3 strategies. Then I present the results of each strategy for 2019. Although I don’t currently use any of the Dogs of the Dow strategies, I think it’s a great way to screen for potentially undervalued stocks.

Strategy #1: Dogs of the Dow

The Dogs of the Dow are the 10 stocks in the Dow Jones Industrial Average (DJIA) with the highest dividend yield. This strategy is to buy equal amounts of the 10 Dogs of the Dow stocks the first trading day of the year. Each subsequent year, re-balance into equal amounts of that new year’s Dogs of the Dow stocks.

Strategy #2: Puppies of the Dow

Instead of buying the 10 Dogs. Buy the 5 lowest priced of them.

Strategy #3: Penultimate Profit Prospect (PPP)

Buy the second lowest-priced of the Dogs.

How did the 2019 Dogs of the Dow stocks perform?

SymbolCompany1/1/2019 adj. close12/31/2019 adj. closeTotal Return 2019
IBMIBM Common Stock109.94134.0421.92%
XOMExxon Mobil Corporation66.569.784.93%
VZVerizon Communications Inc.53.7561.414.23%
CVXChevron Corporation106.37120.5113.29%
PFEPfizer Inc.41.739.18-6.04%
JPMJPMorgan Chase & Co.95.69138.5144.75%
KOCoca-Cola Co45.4955.3521.68%
PGProcter & Gamble Co88.78124.940.68%
CSCOCisco Systems, Inc.41.4747.6114.81%
MRKMerck & Co., Inc.73.5990.9523.59%
2019 Results
Dogs of the Dow19.38%
Puppies of the Dow9.92%
PPP4.93%
DJIA25.34%
S&P 50030.70%
As you can see from the table, the Dogs returned 19.38%, the Puppies returned 9.92%, and the PPP returned 4.93%. In absolute terms, 19.38% is great. The average performance of the DJIA and S&P 500 over the past 100 years is around %10, so it’s nearly double! However, the DJIA scored 25.34% and the S&P 500 did 30.70% last year, so all 3 Dogs of the Dow strategies greatly underperformed the indices. Some interesting things I noticed were that both JPMorgan Chase (JPM) and Procter & Gamble (PG) had stellar years, returning over 40% each. JPM became a holding of Warren Buffett’s Berkshire Hathaway in the 3rd quarter of 2018. Like many of the Oracle of Omaha’s stocks, it went up very nicely. PG has been implementing a turnaround plan and investors appear to like what they see. Pfizer (PFE) was the only Dog to have a negative return. PFE will be an interesting stock to watch in the coming years as it implements its own turnaround strategy. With 2019 behind us, it’s now time to look at the 2020 Dogs of the Dow. You can find them here. If you liked this article, please share it on social media and leave a comment below.

Disclosure

I/we own shares of stock in VZ and MMM Except for Wolves of Investing, I/we are not receiving any compensation from and do not have any business dealings with any companies discussed in this article.  

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Donnie Nguyen

Donnie Nguyen

Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.

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