Sticking with the Dogs in 2012 even though 2011's return depends upon whom you ask

By Dian Vujovich

Anyone looking for a bone in this year’s market might look to the Dogs of the Dow. The group gave investors something to howl about last year: Total return in 2011 for this pack of 10 was up 16.7 percent, according to The Bespoke Investment Group.

Then again, don’t take that figure to the bank just yet. I have read a number of stories today about the Dogs’ performance last year and it seems to change depending upon the source. For instance another source, FuturesMagazine.com, wrote this: “The “Dogs of the Dow” strategy delivered a 12.2% gain in 2011. After adjusting for dividends, the strategy delivered returned 17.2%, compared with a 1.7% loss for the non-Dog stocks and a 4.6% increase for all Dow Jones Industrial Average (DJIA) components. Meanwhile, the S&P 500 ended 2011 virtually unchanged from where it closed in 2010…”

Given that dogs can be temperamental, and calculating challenging for humans, I don’t know which set of numbers are correct. What I do know is that the bow-wow’s did have a good showing last year.

Sure, there’s no guarantee that they will have another good year but if they did it would make four in a row. According to dogsofthedow.com, (no 2011 figures up on that site yet), in 2010 the Dogs were up 20.5 percent and 2009 ahead 16.9 percent. In 2008 it was financial crisis time for the major indices including the Dogs.

So for the investor who likes dividends along with the hope of price appreciation from their blue chip stocks, the doggies are worth a look.

This year, the Dogs of the Dow stocks are similar to last year’s with two exceptions “General Electric and Proctor & Gamble replaced Chevron and McDonald’s, “said Justin Walters, co-founder of Bespoke.

That means the roundup of dogs in 2012 include, in no particular order, the following: AT&T (T); Verizon (VZ); Merck (MRK): Pfizer (PFE); General Electric (GE): Dupont (DD): Johnson & Johnson (JNJ); Intel (INTC): Proctor & Gamble (PG); and Kraft Foods (KFT).