2018 Dogs Of The Dow

Ted

FYI: Below is a check-up on the performance of the “Dogs of the Dow” strategy so far in 2018. For those unfamiliar with the strategy, it’s a simple portfolio allocation and re-balance at the start of each year into the 10 highest yielding stocks in the Dow Jones Industrial Average.

As shown in the table, the 2018 Dogs are currently up an average of 4.77% YTD on a total return basis compared to a total return of 5.11% for the 20 non-Dogs. Coming into the month, the non-Dogs were outperforming the Dogs by a much wider margin, however. With investors shifting out of cyclicals and into more defensive names, the lower-yielding non-Dogs have fallen 4.61% in October, while the Dogs are down just 0.61%. If it weren’t for IBM’s 13.91% drop this month due to another bad earnings report, the Dogs would actually be up 87 basis points MTD.

Merck (MRK) and Pfizer (PFE) have been the best performing Dogs of the Dow this year with total returns of more than 25%. Apple (AAPL) and Microsoft (MSFT) have been the best performing non-Dogs with gains of more than 30%.

If we were to re-balance the strategy now, Merck (MRK) would be removed and JP Morgan (JPM) would enter the Dogs. Note that IBM is now the highest yielding stock in the Dow at 4.82%!
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/2018-dogs-of-the-dow/

Old_Skeet

One of my mutual funds (FDSAX) invest about one third of its money in the Dogs of the Dow strategy (ten positions) and the other two thirds (twenty positions) using the same type strategy for picking stocks from the broader market omitting picks form the financial and utility sectors. I have owned this fund for a good number of years and feel it has served me well. It use to reset its portfolio in the fall of each year; but, in recently viewing its holdings I noticed portfolio changes now seem to be made more often.