Dogs of the Dow Investment StrategyThe 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 DowThe 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 DowInstead 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?
|Symbol||Company||1/1/2019 adj. close||12/31/2019 adj. close||Total Return 2019|
|IBM||IBM Common Stock||109.94||134.04||21.92%|
|XOM||Exxon Mobil Corporation||66.5||69.78||4.93%|
|VZ||Verizon Communications Inc.||53.75||61.4||14.23%|
|JPM||JPMorgan Chase & Co.||95.69||138.51||44.75%|
|PG||Procter & Gamble Co||88.78||124.9||40.68%|
|CSCO||Cisco Systems, Inc.||41.47||47.61||14.81%|
|MRK||Merck & Co., Inc.||73.59||90.95||23.59%|
|Dogs of the Dow||19.38%|
|Puppies of the Dow||9.92%|
DisclosureI/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 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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