Last year in January 2013, I wrote an article on a strategy I created to pick stocks of the Dow in hopes of outperforming the Dow (DIA), as well as the popular "Dogs of the Dow" Strategy. This article is a review of the performance of the stock picks from my article last year, as well as my 2014 Dow stock picks.
My Strategy
For my strategy, I chose to use the main criteria of dividend growth and stability for all 30 stocks of the Dow. Then as a secondary set of criteria to refine that list, I used two simple technical indicators, a moving average and momentum. My method is different because it employs both fundamental and technical analysis, compared to instead of just using the dividend yield like the Dogs of the Dow, or owning the whole Dow Jones Industrial Average ETF. The technical data I used is from the TD Ameritrade ThinkorSwim platform, but also can be found on many other charting websites.
Dividend Stability and Growth Criteria
To get my initial list of Dow stocks for each calendar year I only included stocks that had stable dividends and or growing dividends over the previous 4 quarters from the end of each year, and excluded any companies that have cut their dividends. I used Yahoo Finance to retrieve the historical dividend amounts for all 30 Dow components.
Technical Criteria
1. The chart Scale I used was Weekly.
2. All positions are an equal weight of the portfolio.
3. Condition 1: The weekly close at the end of the year is less than the 10 period simple moving average.
4. Condition 2: The stock must have a 52 period momentum value that is positive.
5. Condition 3: Out of the stocks that meet the first two conditions, select the
