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Dogs of Dow howling more than DJIA

By Dian Vujovich

They’re not seriously howling—maybe barking would be a better descriptive—but this year’s Dogs of the Dow are outperforming the Dow Jones Industrial Index in both yield and year-to-date returns.


Okay, let’s face facts: Last year was one heck of a year for equities and that act is not likely to be followed this year. One investment professional I spoke with thought that individually managed portfolios would be lucky to see a 10 percent return in 2014. As for the indices, that same source wasn’t expecting them to do that well. All of which brings to me those Dogs.


According to DogsoftheDow.com, the average yield on the 10 highest yielding stocks in the DJIA (together they comprise the Dogs of the Dow) was 3.56 percent, as of the close of business on April 24, 2014. And, the Dogs have seen their collective prices increase by 1.8 percent, as well.


Not much to howl about, for sure, but definitely better than the performance of the DJIA. Its average yield was about 1 percent lower, 2.58 percent to be exact. The index is also lower by one-half of 1 percent, through yesterday’s close, according to that same source.


Of the 10 stocks included in the doggie strategy, the highest yielding is AT&T, 5.33 percent, and the lowest is  Microsoft’s 2.81 percent yield. Regarding gains in share price, the two canines leading the pack thus far have been Merck, up almost 15 percent, and Microsoft, up 6.5 percent.


Then again, not all Dogs in the kennel are showing well. AT&T has its impressive yield but its share price is down almost 2 percent. Verizon and General Electric have also lost per share value since the year began, down 5.8 percent and 5.6 percent respectively.


Even so, for those who seek yield and like simple investing strategies, the Dogs of the Dow  is one that’s lasted throughout the years and for many has been worth betting on.


Then again, not everyone agrees with the strategy’s pedigree.


The headline of a January 8th article written for Forbes by contributor John S. Tobey, “Ditch’ Dogs of The Dow’ -  The Mutts Have Bad Genes, Improper Breeding And False Papers” says a lot and is  worth a read before implementing this dollar-fetching approach.

To read more articles, please visit the column archive.

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