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Dogs of the Dow

An Overview of the Dogs of the Dow Investment Strategy

Location of Screen: An example Dogs of the Dow screen is loaded by default in the MSN Deluxe Screener

Inception: This investment strategy was made popular by Michael O’Higgins when he discussed it in his book “Beating the Dow”, published in 1991.

Highlight: Using this strategy showed that from 1973 to 1989, a return of 17.9% annually could be achieved, rather than 11.1% for the Dow.  

Dogs of the Dow investing strategy summarized

The Dogs of the Dow investment strategy is very simple: buy the 10 Dow stocks whose dividend is the largest as a percent of the share price.  The idea seeks to gain in two ways.  First and most obvious is the large dividends.  The second means of gains assumes that the dividend is such a large percentage because the stocks are out of favor (similar to the Contrarian idea), and that they will appreciate and regain their strength over time.

Additional Dogs of the Dow Resources

Stock Screen Parameters for the Dogs of the Dow Investment Strategy

The parameters for this screen simply consist of ordering the Dow Jones stocks by their dividend payout percentage, then purchasing the largest 10.  You should then hold these for 1 year, then repeat the exercise.  I use the MSN Deluxe Screener to find these stocks