Contributor Since 2017
My friends call me often Mr.Dividend since I prefer dividend growth stocks for the long run and not "hot" stock driven by news. My website MoneyInvestExpert.com helps individual investors to find high quality dividend stocks for long-term holding. We use a 4 D's investment approach for success: Discipline, Diversification, Defensive and Dividends. Defensive Aristocrats finds the safest dividend growth stocks trading at undervalued prices using performance metrics combined with fundamentals.
In sharp contrast to last year, U.S. equities generated impressive returns in 2019, with the S&P 500® (SPI500) up 31%, its biggest annual gain since 2013. Easing trade tensions, a potential "Phase-One" deal mid-January, and Fed accommodation renewed optimism about the economic outlook, resulted in higher stock prices.
In 2019, the Dogs of the Dow strategy underperformed both the S&P 500 and DJI. The 10 Dogs of the Dow ended 2019 with a performance of 19.67%. Which is -2.67% below the DJI (DJI) performance 22.34%. The "small Dogs of the Dow" had a difficult year and ended up just 9.71%.
If you like dividends stocks, the Dogs of the Dow strategy is a good place to start.
The Dogs of the Dow is an investing strategy that consists of buying the ten stocks with the highest dividend yield out of the 30 DJIA components at the beginning of the year. The Small Dogs of the Dow, are the five lowest-priced Dogs of the Dow.
Here are the Dogs of the Dow 2020:
Compared to 2019, the 2020 list contains three new companies. Dow Inc. (DOW), 3M (MMM) and Walgreens (WBA) made the 2020 list. These companies replace JP Morgan Chase (JPM), Procter & Gamble (PG) and Merck & Company (MRK).
Dow Inc. is a spinoff of DowDuPont, which it replaced in the DJIA on April 2, 2019. 3M and Walgreens ended 2019 in red with respectively -7.4% and -13.7%.
In 2019, out of the 10 Dog stocks, 9 showed a positive total return over 2019, and just one was on the negative side. Especially, the small Dogs of the Dow had a difficult year and ended up just 9.71%. The table below lists the 10 dogs of the dow stocks, including the annual 2019 price performance and total return.
Looking back over a longer period of time (2008-2019), the average annual return of the DJIA was 8.96% versus 10.24% for the Dogs of the Dow strategy. The small Dogs of the Dow are over time slightly better with an average annual return of 9.76%. The out-performance in percentages is 1.27% for the general Dogs strategy and 0.79% for the small dogs. Both strategies outperform 7 out of the last 12 years.
Some closing thoughts, dividend stocks and the Dogs of the Dow strategy are an interesting starting point for dividend investors. This popular investment strategy that prioritizes high dividend yields, beat the Dow Jones Index by more than 1% a year on average through the last decade. The Dogs strategy is an easy way to keep the (investment) emotions out and sticking to your strategy, which is an essential part of successful investing.
Disclosure: I am/we are long IBM, mmm, cvx, wba, xom, PG.