Dogs of the DOW: Lessons on Valuation And Dividend Growth | FAST Graphs

Dogs of the Dow
Each year financial news services such as the Wall Street Journal and others like to talk about the strategy known as Dogs of the Dow. This is a popular and established strategy involving buying the 10 stocks with the highest dividend yields of the 30 Dow components at the first of the year and holding them for the next 12 months. Then, it is rinse and repeat, you simply replace any of the previous 10 highest yielding stocks that have fallen off the wagon with new ones.

This strategy has outperformed the Dow Jones and even the S&P 500 many times over the years. However, 2022 was the first time since 2018 that this strategy outperformed the indices. Although, from a value investor’s point of view, this strategy makes sense because it implies high yields based on low valuations (stock prices). Consequently, rather than just measure whether outperformed or not, as Mr. Valuation I prefer to evaluate why it did or did not outperform.

But perhaps even more importantly, even though this strategy implies reasonably valued stocks, I find it more appropriate for investors seeking dividend income. From the perspective of dividend income versus the indices, the Dogs of the Dow has outperformed based on dividend income most every year including 2018, 2019, 2020, and 2021 where it did not outperform on a total return.
In conclusion, although I do not believe in just blindly following this strategy, I have always liked it as a starting point for dividend growth investing. My reasoning is simple, the Dow Jones 30 stocks are as a group high-quality blue-chip companies. Therefore, they represent fertile ground for dividend growth stock investors that are also concerned with quality. And of course, from a valuation perspective since these 10 stocks are typically a function of low stock prices and high dividend yields, it only makes sense for the value-oriented dividend growth stock investor.

Time Codes:
0:00 – Introduction
3:20 – Apple Inc (AAPL)
3:46 – Amgen Inc (AMGN)
4:07 – American Express (AXP)
4:19 – Boeing Co (BA)
4:37 – Caterpillar Inc (CAT)
4:50 – Salesforce Inc (CRM)
5:09 – Cisco Systems (CSCO)
5:15 – Chevron Corp (CVX)
5:36 – Walt Disney Co (DIS)
5:47 – Dow Inc (DOW)
6:05 – Goldman Sachs Group (GS)
6:40 – Home Depot (HD)
6:59 – Honeywell International Inc (HON)
7:17 – International Business Machines (IBM)
7:28 – Intel Corp (INTC)
7:50 – Johnson & Johnson (JNJ)
7:58 – JPMorgan Chase & Co (JPM)
8:08 – Coca Cola Co (KO)
8:17 – McDonalds Corp (MCD)
8:25 – 3M Co (MMM)
8:32 – Merck & Co (MRK)
8:50 – Microsoft Corp (MSFT)
9:02 – Nike Inc (NKE)
9:08 – Procter & Gamble (PG)
9:21 – Travelers (TRV)
9:27 – UnitedHealth Group (UNH)
9:36 – Visa Inc (V)
9:56 – Verizon Communications (VZ)
10:06 – Walgreens Boots Alliance Inc (WBA)
11:42 - Amgen Inc (AMGN)
12:05 - Cisco Systems (CSCO)
12:13 - Chevron Corp (CVX)
12:32 - Dow Inc (DOW)
12:37 - International Business Machines (IBM)
12:48 - Intel Corp (INTC)
13:03 - JPMorgan Chase & Co (JPM)
13:08 - 3M Co (MMM)
13:23 - Verizon Communications (VZ)
13:36 - Walgreens Boots Alliance Inc (WBA)

Try FAST Graphs for FREE:
https://www.fastgraphs.com

Disclaimer: FAST Graphs is a tool designed to reveal and present information related to financial data and investment metrics. It is not intended to provide specific advice or recommendations. Instead, it offers a comprehensive view of relevant data, empowering users to make informed decisions based on their own analysis. It's your first step to a more comprehensive research and due diligence process. In short, it is a tool to think with. The opinions in this video are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned.

#dividendstocks #investing #DOWstocks