The Dogs Of The CCC; And A Dividend Podcast?

by: Doctor Dividend


There are the Dogs of the Dow; How about the CCC?

The results of the Dogs of the CCC.

Shall I start my new venture - a dividend podcast? I need your thoughts.

A few weeks back, I was reading the article "The Gods of the Dow," found here. It's a play on the concept of the Dogs of the Dow and the Small Dogs of the Dow, which for those who don't know the concept, it is quite simple.

1) Take the 30 stocks that make up the DJIA

2) Rank in yield from highest to lowest on January 1

3) Buy the 10 highest yielding stocks in equal amounts

The Small Dogs of the Dow takes this idea two steps further

4) Take those 10 highest yielding stocks and put them in share price order

5) Buy the 5 stocks in equal weight according to those with the cheapest share price

The concept was successful for an extended period, but like anything, once it becomes popular, it gets pulled back to the main stream average and doesn't have the alpha it once had. So I began thinking about a new index that could be used. One that almost all dividend growth readers use as their Investing Bible. The CCC spreadsheet. Could there be an alpha applying the same sort of parameters to the Champions?

Of course, the history of the CCC pales in comparison. The starting prices were first compiled for January 15, 2008. But I thought this could give a glimpse in a new alpha dog, which I am calling the Champion Canines and I added one little twist:

1) Take the Champion sheet only from the CCC spreadsheet

2) Rank in yield from highest to lowest on January 1

3) If any in the top 10 of yields has not increased their dividend in the last year, they are removed (it is noted in the dividend dates by red font in columns M-O)

4) Buy the 10 highest yielding stocks in equal amounts

To simulate the Small Dogs of the Dow, we do the same thing with share price and buying the 5 stocks in equal weight according to those with the cheapest share price. I will call these the Champion Chihuahuas.

For the results, I did not include taxes nor commissions. For dividends received, it was compiled as cash and not reinvested. The stocks used were held for a twelve months, no matter what happened to the dividend. For brevity sake, I will not list out each stock that was held for each year. However, the CCC archives can be found from the website.

For the real Dogs, there is a Dogs of the Dow website. I added the initial yield at the start of the year to the share price movement to get the final return for each year, including the DJIA. The results are shown below:

Annual results from 2008-2015 of the Different Dogs

Like everything in 2008, all stocks got slaughtered and the CCC was no exception. 8 out of the 10 stocks in 2008 were banks. The other two stocks were Progressive Insurance and the REIT UDR. What hurt the Chihuahuas performance in 2009 were the few bank holdouts from 2008. They finally gave in and cut their dividends in 2009 and having 3 out of 5 banking stocks couldn't overcome that concentration.

I purposely showed both CAGRs to remove the extreme outlier that was 2008. When including that horrendous year, might there be some safety from a maximum drawdown standpoint? Perhaps. But moving past that point, there seems to be no outperformance by using the CCC list over the traditional Dogs of the Dow to generate the alpha we all look for. With more data points moving forward, separation of a superior formula may begin to show itself. As for now, I'll provide the yearly performance but don't expect to personally invest in the concept.

As for the Canines and Chihuahuas (in bold) for 2016, they are listed as followed:

On a separate note, I am a big fan of podcasts. For those who don't know what a podcast is, think of it as a recorded radio show. They are fantastic during commuting times in rush hour when someone doesn't want to listen to traditional radio. As I was looking for a dividend podcast, the offerings that are currently out there are not sufficient to increase my education and were frustrating to listen to. So my thought was, "Maybe I should do one?"

Although most guests would be ones known to be in the dividend growth space, I would broaden the horizons and think more from a cash flow perspective - preferreds, bonds, options, and some other outside the box thoughts on passive cash flow for life. I would interview some of the more proficient article writers, but would really want to include the average Joes and Janes - frequent commenters who don't have any desire to write an article, but still have a ton of knowledge because of being in the trenches for years or decades. And, of course, I would include the many investing faux pas I have made so we can all learn together.

So I ask that you write in the comment section if this is something you would want as an option to increase your knowledge, if it sounds intriguing or one of no interest.

To your health, an optimistic 2016 and a Happy New Year!

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ED, EMR, HCP, MCY, MDU, NNN, ORI, PGR, STR, T, UDR, UHT over the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.