how the dogs of the dow strategy works
the idea is to make stock picking somewhat easy and relatively safe the latter because the universe is limited to blue chip stocks as a tactic dogs of the dow goes like this after the stock market closes on the last day of the year select the 10 highest dividend yielding stocks in the djia then on the first trading day of the new year invest an equal dollar amount in each of them hold the portfolio for a year then repeat the process at the beginning of each subsequent year for most nonprofessionals though investing is never that simple especially with the myriad of strategies out there so it behooves the average individual investor to understand what they are doing with their money hence dogs of the dow tools abound just browse the internet to see dogs of the dow opinions commentary analyses calculators charts forecasts and stock screeners there s even a dogs of the dow website because this is intended to be a low maintenance long term strategy that mimics the performance of the djia it shouldn t be surprising that the long term results are similar there have been years when the dow has outperformed the dogs and vice versa but its performance over time is impressive sample performance comparisonthe dogs of the dow experienced greater losses during the financial crisis of 2008 than the djia but in the decade and more that followed it only slightly underperformed the bellwether index from 2013 to 2023 the dogs of the dow had a trailing total return of 10 02 compared to a 11 48 trailing total return of the dow jones industrial average djia 3the cumulative effect of this performance year after year shows that despite losing more in 2008 than the index the strategy made up ground and turned in a respectable performance for the decade with a very similar result to the djia in the last five years from 2018 to 2023 however the dogs have trailed the djia with a wider gap turning in trailing total returns of 5 29 compared to the djia s trailing total return of 8 39 4