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Monday, October 17, 2005

Dogs of the Dow

Have you heard of the Dogs of the Dow? I first heard of this investment strategy in the 1990s and it seemed to fall out of favor during the dot com bubble. However I think it is again gaining attention as large-cap stocks have continued to under perform the broader market.

The Dogs of the Dow is a simple investment strategy. The strategy is simply investing an equal amount in the 10 highest yielding Dow stocks on Jan 1st of each year. Easy to define, easy to do, easy to benchmark. Infact the Dogs of the Dow supposedly have had an annual return rate of 17.7% since 1973.

The 2005 Dogs of the Dow

Ticker

Company

Price

Yield

SBC

SBC

$ 25.77

5.01%

GM

General Motors

$ 40.06

4.99%

MO

Altria

$ 61.10

4.78%

MRK

Merck

$ 32.14

4.73%

VZ

Verizon

$ 40.51

3.80%

JPM

JP Morgan Chase

$ 39.01

3.49%

C

Citigroup

$ 48.18

3.32%

DD

DuPont

$ 49.05

2.85%

PFE

Pfizer

$ 26.89

2.83%

GE

General Electric

$ 36.50

2.41%

(Prices as of Jan 1)

I currently have holdings in a couple Dogs of the Dow - Pfizer (PFE), Merck (MRK), General Electric(GE). I also have some Bellsouth which is almost a sister company to Verizon and SBC.

I think the Dogs of the Dow investment strategy fit in nicely with all my discussions on DRIPs as DRIPs could be a good vehicle to use for investment purchases. I plan to do some historical work on the Dogs of the Dow and work it into some of my future investment decisions, however I don't plan to strictly follow this investment strategy - its a little too mechanical for me.

1 Comments:

  • Wow, your site rules! You talk about drips and now the Dogs of the Dow. Been a while since I heard about that investment strategy. Greate post. Hey can you put my blog on your site I already have your link on mine. thanks

    By Blogger tk_guy, at 9:39 PM  

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