When we lasted reviewed this year’s Dogs of the Dow, the group was down 4.2% while the Dow Jones was in the red by 2.3%. At the current time, this year’s stocks in the Dogs of the Dow are down an average of 4.1% while the Dow Jones is in the red just 1.7%.
The biggest shake-up in the Dow in a long while was the removal of General Electric from the index, but the stock will remain in our group, and unfortunately it continues to weigh down the rest of this year’s stocks.
The strategy involves buying the ten stocks in the Dow Jones with the highest yields at the start of the year and holding those positions through the year regardless of performance, with the idea being that their yields were so high because the stocks themselves were undervalued at the start of the year and would appreciate as investors push the valuations higher.
The strategy has worked perfectly in recent years, but this year the group has struggled to keep pace the overall market for most of the year.
With a big loser in General Electric, which is down over 25% over the year, and only three of the ten stocks showing gains for the year, it has been a tough year for the group. The overall market has been weak, but our stocks have done worse, and if it were not for the positive impact of their dividends, the group would be down even more at -5.7%.
Let’s take a closer look at this year’s group to spot the areas or strengths and weaknesses.