In most instances, the proposition here comes down to getting paid a lot to wait out whatever malaise a company is facing. While NKE continued to trend higher, we didn’t chase the stock. The idea is to buy when no one is paying attention, and the stock is trading in the extremely oversold ranges, and to close the position when trading in the extremely overbought ranges.
The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. For more than half a century, the Dogs of the Dow has presented a compelling case that using dividend yield to gauge value among blue-chip stocks is a strategy of superior breeding for long-term success. Many investors love the Dogs of the Dow because it’s so easy to follow. All you have to do is look which 10 stocks among the 30 Dow Jones Industrials components have the highest dividend yield on the last day of the year. Then, invest an equal amount in each of those 10 top-yielding stocks, and hold those investments through the end of the subsequent year. Lastly, Verizon Communications (VZ -0.24%) has consistently been among the Dogs of the Dow because of the high dividend yields that telecom stocks have paid for years.
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.
After the bear market in 2022, 2023 brought a pleasant surprise for many investors. Big gains in the Nasdaq Composite and S&P 500 led to closes for the year near record levels. One of the biggest differences between Dividend Kings and Dividend Aristocrats is the minimum number of consecutive years a company must increase its dividend payouts. In addition, Dividend Kings are not limited to the S&P 500 companies as are the Dividend Aristocrats. Enter your email address and we’ll send you our list of which EV stocks show the most long-term potential.
The Dow’s Biggest Dividends: Here Are 2023’s Dogs.
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.
How the Dogs of the Dow Strategy Works
You’ll also need to rebalance your holdings of stocks that stay on the Dogs list to get back to equal weightings. The primary benefit that investors get from using the Dogs of the Dow strategy is that it takes almost no time to set up and maintain. At the beginning of the year, you just have to take a look at the 10 Dow stocks that finished the previous year with the highest dividend yields.
- Many investors love the Dogs of the Dow because it’s so easy to follow.
- Today, the Technology, Financials, and Healthcare sectors have a significant representation in the Dow 30.
- All investors had to do was take those 10 stocks and invest equal amounts in each of them.
- But the devil is in the details, and in healthcare, there’s a lot of them.
- 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.
Verizon (VZ, 6.8%)
However, this growth is likely to be slower and steady rather than rapid and meteoric. After all, Alphabet’s (GOOGL) Google and Microsoft (MSFT) are swimming in the same pond. Thousands of dividend investors trust our online tools and research to track their portfolios, avoid dividend cuts, and achieve lasting financial freedom.
Advanced Stock Screeners and Research Tools
Below are the current Dogs of the Dow ranked by share price, from lowest to highest. The first five stocks on the table are the Small Dogs of the Dow. Alongside each of the stocks are billionaire investors who report holding the stock on their most recent Form 13-F filings with the U.S. The principle of Occam’s razor suggests that solutions involving fewer variables are preferable to those that require more inputs. Simpler is better because getting the job done with just a few moving parts carries less risk of confusion and failure than a highly complex system. Yet, many investors are hopeful that the value stocks that tend to get included in the Dogs of the Dow are primed for a big bounce in 2024.
The main reason to follow the Dogs is that it presents a straightforward formula designed to perform roughly in line with the Dow. Despite the stigma of giving shareholders a pay cut, reducing the dividend is hardly an automatic death sentence for a stock. Intel (INTC), a Dogs of the Dow graduate and a member last year, went on to double in value by the end of 2023 after slashing its dividend by two-thirds in late February. Fortunately, there are plenty of safe harbors in our “Perfect Income” portfolio—and you can enjoy their security and sky-high dividends, too.
- The most recent earnings report from Dow might give investors confidence that it is on the upswing, with the company beating the consensus earnings estimate.
- However, waiting it out with a 5% yield, and the financial strength to maintain it, may prove to be alluring for many investors.
- The process repeats, and investors identify the 10 DJIA stocks with the highest dividend yields for the current year.
- From Verizon trying to time the arrival of 5G, to Intel’s (INTC) increasingly perilous position in the chip business to IBM’s (IBM) fight for share among trillion-dollar tech giants, these dogs face a steep climb.
- In this scenario, an investor reinvesting in high-dividend-yielding companies annually would hope to outperform the overall market.
Merck was one of the top-performing Dividend Aristocrats and Dow 30 stocks and thus the yield declined. The cumulative effect of this performance year after year shows that despite losing more in 2008 than the index, the strategy made up ground and turned in a respectable performance for the decade with a very similar result to the DJIA. In the last five years, from 2018 to 2023, however, the Dogs have trailed the DJIA with a wider gap, turning in trailing total returns of 5.29% compared to the DJIA’s trailing total return of 8.39%. You can hand-pick individual stocks and build your own portfolio, invest directly in the Dow through exchange-traded funds (ETFs), or you can follow the Dogs of the Dow strategy—whose stocks offer better yields than the Dow as a whole. Often, in fact, the Dogs of the dow 2023 Dogs have been able to outperform the Dow over the course of the year.
History of the Dogs of the Dow
They believe these five stocks are the five best companies for investors to buy now… Three of the four worst performers in the Dow were among 2023’s Dogs of the Dow, including the two stocks with the weakest overall returns. We can’t retire off of 4.5% in annual yield—a “perfect” amount of portfolio income is closer to 7%. Even if we put a million bucks to work on the Dogs, we’d still only be netting $45,000 a year. Of course, you and I know that high yields don’t mean a stock is a value—sometimes they just mean a stock is cheap. The Dogs strategy showed cracks in 2019, really fell off the rails in 2020 and came up short again in 2021.
Then, you would divide your money equally and invest in the top fifteen Dogs. Analyzing the average yields of the Dogs of the Dow for 2022 and 2023 provides valuable insights into the Dogs of the Dow strategy performance. In 2022 the average yield was 3.77%, while in 2023, it increased to 4.67%. Tracking the Dogs of the Dow strategy over time offers investors valuable insights into its consistency, adaptability, risk management and income-generation potential. Consistent performance reflects a focus on high dividends, while changes in the portfolio year to year show adaptability to market shifts.