Dogs of the Dow are beckoning bow-WOW's
By Dian Vujovich
If you’ve never looked at the often over-looked stocks labeled the Dogs of the Dow, there’s no better time than now. These puppies could return good profits to you this year. One thing is for sure, though, you won’t find yields like them from any short-term parking spots like money market accounts at banks or mutual funds.
Just to refresh, the Dogs are comprised of the 10 stocks out of the Dow Jones Industrial Average’s 30 that have the highest yields. Typically, the 10 change from year-to-year but not always. Even if any, or a few don’t change, to play correctly you’ve got to sell all Dogs from the previous year and begin again fresh. And, this is really important, purchase an equal number of shares in all 10 Dogs.
This investment strategy has been a staple in the world of simple value investment practices because what you’re investing in are out-of-favor stocks from the country’s biggest companies, as you’ll see in the wowzer list below. The strategy makes good sense for those who think value investing is wise and like dividend income.
In a snapshot from the past during 1996 and 1997 the Dogs of the Dow gained 29 and 22 percent respectively. And in 2001 and 2002 were down 5 and 9 percent. In 2003, however, it was back to the races as the group gained 29 percent. All this according to a Wealthdaily.com article.
Decide to throw a bone to the 10 companies that make up 2011’s Dogs of the Dow and what follows are the companies you will be purchasing an equal number of shares in.
• AT&T (T), 2010 closing price and yield: $29.38; 5.85%
•Verizon (VZ), 2010 closing price and yield: $35.78; 5.45%
•Pfizer (PFE), 2010 closing price and yield: $17.51; 4.57%
•Merck (MRK), 2010 closing price and yield: $36.94; 4.22%
•Kraft Foods (KFT), 2010 closing price and yield: $31.51; 3.68%
•Johnson & Johnson (JNJ), 2010 closing price and yield: $61.85; 3.49%
•Intel (INTL), 2010 closing price and yield: $21.03; 3.42%
•DuPont (DD), 2010 closing price and yield: $49.88; 3.29%
•McDonald’s (MCD), 2010 closing price and yield: $76.76; 3.18%
•Chevron (CVX), 2010 closing price and yield; $91.25; 3.16%
Good luck. Now go fetch.
To read more articles, please visit the column archive.