Below, you’ll see the 10 stocks that qualify as the 2024 Dogs of the Dow, and you’ll also get a preview of what some of these companies are looking forward to in the coming year. Even better, many investors could double, triple, even quadruple the dividends they’re receiving from the average S&P 500 stocks. With a lot of overseas business, the historically strong dollar currently delivers a big hit to IBM’s revenues, and growth is better than the reported numbers. In its latest earnings report, IBM said it expects revenue growth « above its mid-single digit model, » with currency translation presenting a seven percentage point hit. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Using our proprietary indicators, we identified an opportune time to purchase NKE between November 2017 and January 2018.
Does the Dogs of the Dow Strategy Work?
All investors had to do was take those 10 stocks and invest equal amounts in each of them. Investors Dogs of the dow 2023 can choose between these ETFs and mutual funds to gain exposure to dividend-yielding stocks that align with the Dogs of the Dow strategy. It’s essential to research each option thoroughly, considering factors such as fees, historical performance and specific stock holdings, to determine which best suits your investment goals and risk tolerance.
- The gray cloud hanging over Intel is writ large in the initial public offering (IPO) of its Mobileye Global (MBLY) unit which it acquired for $15.3 billion in 2017.
- Yet, investors are hopeful that 2024 will bring a return to the past successes of the Dogs of the Dow strategy.
- The Dogs of the Dow strategy presents investors with a straightforward yet effective method for capitalizing on the income-generating potential of blue-chip stocks.
- After holding these stocks for 12 months, you rebalance the portfolio into the 10 stocks with the highest dividend yields one year hence and repeat the process annually.
Which dividend king has the most consecutive years of increasing dividend payments?
Similarly, Coca-Cola (KO 0.07%) stock rose 8% on strong investor appetite for consumer staples stocks. The Dogs of the Dow strategy lagged the regular Dow Jones Industrials by about four percentage points in 2023. However, the underperformance wasn’t quite as bad as it looked, because the higher dividend yield on Dogs of the Dow stocks cut the gap in half in terms of total returns. Nevertheless, the strategy underperformed the Dow for the fourth time in five years. Rooted in the foundational principles of Charles Dow, the originator of the Dow Theory, the “Dogs of the Dow” strategy is a contrarian investment approach aimed at outperforming the Dow Jones Industrial Average. This strategy identifies the ten highest-yielding blue-chip stocks within the index, assuming they are momentarily undervalued due to their high dividend yields and set for a return to their true worth.
The 2024 Dogs of the Dow
One interesting point is if you follow this strategy, about 40% of your portfolio would be in tech and communications. The Dow Jones Industrial Average (DJIA) is also referred to as the Dow 30, and both names are used synonymously. The Dow Jones 30 refers to an index of 30 blue-chip stocks created by Wall Street Journal editor Charles Dow in 1896.
Ian Cooper is an expert options trader with decades of experience, and a special talent for predicting big market moves. Together with TradeWins Publishing, Ian shares exactly how you can follow in his footsteps to potentially find huge profits in today’s markets. At the start of the year, you simply buy the top 10 highest-yielding stocks on the most beaten-down stocks on the Dow Jones. For value-seeking investors, 2023 was even more disappointing. In particular, those following the popular strategy known as the Dogs of the Dow had to struggle through another year of underperforming the Dow and other major market indexes.
Returns: Dogs of the Dow vs. Dow Jones Industrials
- Usually, a stock on the Dogs of the Dow list is undervalued compared to the broader market.
- The composition of the Dogs of the Dow changes annually, and here’s why.
- In 2022 the average yield was 3.77%, while in 2023, it increased to 4.67%.
- If that proves to be the case, it would be a good sign for the Dogs, which historically have done better in value-friendly market environments.
If reliability and simplicity are what you seek in stock market investing, it’s hard to beat the Dogs of the Dow. The investment strategy calls for buying equal dollar amounts of each of the 10 stocks in the Dow Jones Industrial Average with the highest dividend yields as a new year begins. After holding these stocks for 12 months, you rebalance the portfolio into the 10 stocks with the highest dividend yields one year hence and repeat the process annually. The idea is to catch high-quality companies while they’re temporarily down on their luck and bargain-priced, and to get paid by the dividends while you wait for the eventual recovery.
Fetching Returns with the Dogs of the Dow
If you receive a monthly dividend of $0.60 per share and own 200 shares, your monthly dividend is equal to $0.60 per share multiplied by 200 or $120 per month. However, some companies also choose to pay their dividends monthly, semi-annually, annually and some pay irregularly. By contrast, the stocks exiting the Dogs of the Dow in 2024 did great in 2023.
CVS Health (CVS) went through such a transformative shift, most notably with its November 2018 acquisition of health insurer Aetna for an eye-popping $78 billion. CVS shares have risen about 20% since then while paying a solid 2.3% dividend. Walgreens, however, has not done anything on the scale of CVS’s Aetna deal, but Cigna’s (CI) healthcare unit, Evernorth, participated in the Village MD/Summit transaction, which may presage future, strategic deals at Walgreens.
This involves a careful blend of analytical prowess—to identify which stocks are truly undervalued and not just temporarily distressed—and the insight to understand broader market sentiments. Echoing Solon’s belief that “Learning is not wisdom; the essence of wisdom is seeing what is valuable and holding fast to it,” this strategy emphasizes the critical importance of initial stock selection. Investors are prompted to embrace wisdom and courage, exploring territories others might avoid, thereby potentially enjoying more significant gains through capital growth and substantial dividend yields.
He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha. Coca-Cola had a +10.6% total return, and Merck was up 49.4% compared to the (-18.1%) return of the S&P 500 Index.
It’s a straightforward approach that doesn’t require constant monitoring or complex maneuvers. Instead, it’s a « set it and forget it » strategy that appeals to investors looking to simplify their approach while potentially reaping the benefits of dividend income and stock price appreciation. The Dogs of the Dow website states since 2000, the strategy has had an average total return of ~8.7% when dividends are reinvested. This return is compared to the average annual returns of ~7.9% for the Dow 30 during the same period. In addition, the S&P 500 Index has returned ~7.6% in the same stretch.
Other Dividend Stock Lists
Moreover, you’d consider how well the Dogs of the Dow portfolio achieves diversification. Does it provide exposure to a variety of industries and risk profiles, or is it heavily skewed toward certain types of stocks? Lastly, evaluating how effective the Dogs of the Dow strategy is at generating income through dividends is crucial. Investors following this strategy typically seek a reliable income stream, so you would assess whether the chosen stocks delivered on this front.