A New Year and new Dow Dogs

By Dian Vujovich

Sorry that I’m a few days late in getting this year’s listing of Dogs of the Dow stocks to you, but that’s okay: Given that the first two trading days of 2015 haven’t been anything to crow about, investing in the 10 stocks that make up this litter might not be such a bad thing.

Before going to the list, the Dog investment strategy isn’t a perfect one but it sure is worth noticing. In 2014, for example, the Dow Dogs beat their benchmark, which, I might add, is something worth howling about given that active and/or professional money managers often aren’t able to do that—but the Dogs did. According to the Bespoke Investment Group, the Dogs of the Dow returned 10.8 percent, including dividends, to investors who followed the put-equal-amounts-of-money-into-DJIA’s-10-highest-dividend-paying-stocks theme outperforming the DJIA’s 10 percent, including dividends, return.

So while 2014 returns weren’t as great as say the S&P 500’s total return of 13,69 percent was the Dogs still did good.

They’ve also got a respectable longer-term track record beating the DJIAs performance on average by about 1.3 percent over the last 14 years with the Dogs total average return of 8.9 percent and the DJIAs of 7.6 percent.

The 2015 Dogs of the Dow list, beginning with the highest yielding stocks, includes these 10 companies: AT&T (T); Verizon (VZ); Chevron (CVX); McDonalds (MCD); General Electric (GE); Pfizer (PFE); Merck (MRK); Caterpillar (CAT); Exxon Mobil (XOM) and Coca-Cola (KO).

It’s an interesting group of well-known breeds making up this year’s list that have only begun to run. Since I’m a fan of this strategy, I’m routing for them.

On the other hand, if you don’t like these Dogs but enjoy investing in the highest yielding stocks among various sectors, the ALPS Sector Dividend Dogs ETF (SDOG) is a way to play a similar game.

Good luck.