Dog Steps: Investing in the Dogs of the Dow is relatively simple. After the stock market closes on the last day of the year, of the 30 stocks that make up the Dow Jones Industrial Average. select the ten stocks which have the highest dividend yield. Then simply get in touch with your broker and invest an equal dollar amount in each of these ten high yield stocks. Then hold these ten Dogs of the Dow for one year. Repeat these steps each and every year. That’s it!
If simplicity is what you are looking for, this is about as simple as it gets. One telephone call to your broker per year and your Dogs of the Dow portfolio is ready to go. And to make it even simpler, just select your Dogs of the Dow bookmark on the last day of the calendar year and the official Dogs of the Dow will be listed for your convenience. If you would like to be notified the moment that the Dogs of the Dow are revised, sign up to receive the popular Dogs of the Dow Newsletter. It’s Free!
Small Dog Steps: Some of you may be interested in trying to outperform even the traditional Dogs of the Dow. Well, we have a way that historically has done just that. On the last day of any given year, select the ten highest yielding stocks as you normally would. Of these ten Dogs simply select the five Dogs with the lowest stock price and you will have what we call the Small Dogs of the Dow (Sometimes referred to as the Puppies of the Dow or the Flying Five). Then get in touch with your broker and invest an equal dollar amount in each of these 5 high yielding, low priced stocks. Then hold these five Small Dogs of the Dow for one year. Investing in the Puppies of the Dow would have resulted in a 20.9% average annual return since 1973!(As reported in U.S. News World Report, July 8, 1996)
The Cost of Ownership: Now that you know exactly how to invest in the Dogs of the Dow you should try to find a low cost method for upkeep. Basically one should consider a discount broker. Why pay for a full service broker if you already know which stocks you are going to buy? To get you started we suggest you take a look at Scottrade or Fidelity Investments. At $7-$8 to buy and $7-$8 to sell each stock they are really hard to beat. By the way, the Dogs of the Dow has no relation to Scottrade, Fidelity or any other broker for that matter and the Dogs will be quick to stray if a better deal can be found. [For more information on the leading deep discount brokers, try our Top Dog Brokers page.]
Beware of Dog: We here at the Dogs of the Dow take no responsibility for the performance of this high dividend yield investment technique. We are simply presenting this technique since it has historically outperformed the stock market as measured by the Dow Jones Industrial Average.
An important side note: Within the past 20 years there have been periods in which this investment technique has underperformed the Dow as a whole. An investor should be aware that this is a long term investment strategy and no one should expect the Dogs to outperform the Dow each and every year.