DOD Performance & Stats ELEMENTS Dogs of Dow DJ HY Sel 10 TR ETN

With the stock below the 200-day since Dec. 17 the risk of a “death cross” cannot be ignored. The 50-day and 200-day are converging at $45.59 and $44.77, respectively, and if the 50-day falls below the 200-day a “death cross” will be confirmed. The 12x3x3 weekly slow stochastic reading is projected to slip below the overbought threshold of 80.00 at 79.81. The weekly chart for Verizon is positive with the stock above its five-week modified moving average of $47.90 and above its 200-week simple moving average of $48.83, which is the reversion to the mean, last tested this week. The 12x3x3 weekly slow stochastic reading rose to 41.14 at the end of November. The 12x3x3 weekly slow stochastic reading declined to 69.20 at the end of November.

Investments in lower-rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Mortgage- and asset-backed securities are subject to prepayment risk, which is the risk that the borrower will prepay some or all of the principal owed to the issuer. Funds that invest in pooled investment vehicles may experience higher fees.

Past performance is no guarantee of future results so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than the performance quoted. Balanced Fund and Total Return indicator spread mt4 Fund- The Funds’ Portfolio Managers explain the “Dogs of the Dow” investment strategy and the potential power of these dividend-paying companies. They also discuss how an investor might incorporate the strategy into their portfolio.

dog of the dow 2017

He also predicted that the strategy would not work well for 2014. This may be because they are trying to earn your business and can’t invest in these stocks themselves! But, The Dogs of the Dow strategy asks followers to invest in as few as 2 stocks in any given year. This could be a decent move if you have the skill and knowledge of Charlie Munger, but it’s unwise for mere mortals. From this standpoint your risk is exceptionally high of choosing a Dow company that may even drop out of the Dow, which they sometimes do, pushing down prices due to delisting and destroying your profit potential. All it takes is one stumble for those average returns to crumble.

It’s payout ratio currently hovers at around 22% and has a dividend of just 1.42%. If you were to triple the payout ratio, this would probably be the biggest dog in the entire Dow! The strategy can also get extremely volatile and amount to putting all of your investment dollars into just a couple of stocks.

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The win marked the Dogs’ fourth consecutive year of outperformance. “The challenge with this methodology is it focuses on only 10 companies, which is not a very diverse portfolio,” says Joseph M. Favorito CFP® professional and managing partner at Landmark Wealth Management. “It doesn’t take into account the tax impact of possibly turning over your entire portfolio should you attempt this in a non-retirement account without a tax shelter,” Favorito says.

For instance, the May $33/$34 reversal spread was last bid at 11 cents, or $11 per pair of contracts. As with the above spreads, this one will assign you CSCO stock if the shares dip below $33 ahead of expiration, or allow you to purchase Cisco for $34 if the shares rally following earnings. This bull reversal spread was last bid at 55 cents, or $55 per pair of contracts, and allows you to buy CVX for $106 if the shares trade north of the bought call at expiration.

For those who aren’t familiar with the Dogs of the Dow strategy, it’s a simple way to try to improve on the performance of the overall Dow. To use the strategy, first figure out which 10 Dow stocks had the highest dividend yields at the beginning black edge book of 2017. Then, you invest equal amounts of money in each of the 10 stocks. Hold onto the stocks throughout the year, and at the beginning of 2018, you’ll take a new look to see which 10 Dow components have the highest yields at that point.

dog of the dow 2017

While Federal Reserve interest-rate increases seem to give the stock market conniptions, investors should understand that they’re often a positive for banks such as JPMorgan Chase. For one, it means the interest rates they charge on loans can go up while the cost of funds that come from deposits barely budge. JPMorgan, as one of the country’s largest lenders, is poised to benefit. The Fed has signaled that the pace of interest-rate hikes will likely slow in 2019, but Wall Street still expects a couple of bumps before the year is through.

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Market Price is based on the midpoint of the bid/ask spread at 4 p.m. ET and does not represent the returns an investor would receive if shares were traded at other times. The “Dogs of the Dow” was presented by Michael O’Higgins, an investment manager, in his 1991 book, Beating the Dow.

There is a common belief that investing in small companies is incredibly risky. In fact it seems like large institutions are purposely trying to underplay the benefits of investing in small stocks. Most Dogs of the Dow earn their admission into the club through precipitous declines in their stock price. But like Merck, P&G is a Dog this year simply because it makes a lot of money and distributes it to shareholders in the form of a healthy dividend. The Dogs of the Dow method uses dividend yield to identify which companies are in the contraction phase of the cycle to invest in now, with the hope of later selling for a profit during the expansion phase of the business cycle. The Dogs of the Dow is a strategy that focuses the 10 Dow Jones Industrial Average stocks with the highest dividend yields.

Then repeat every year after rebalancing, with the new highest dividend yielding stocks. XOM shares look cheap, but more importantly, the company looks solid. The company’s long-term debt-to-capital ratio is just 10%, putting the company in fine position to weather commodity-price swings. Further, its diverse businesses include upstream and downstream and everything in between – refining and retail can actually help lessen the negative impact of weak oil and natural gas prices.

At this point, many dividend investors are looking to the future. Even with a reduced dividend payout, General Electric is almost certain to join the Dogs next year along with Procter & Gamble, while Boeing and Caterpillar will most likely be the stocks to give way. Hasn’t been quite as successful, but the heavy-equipment manufacturer’s stock has jumped more than 50% as demand has returned from key sectors like energy, mining, and construction. Despite those winners, though, no other Dog stock has produced a return of more than 12%, whereas nine of the 20 non-Dog Dow stocks have returned at least 30% price gains so far this year. In particular, the energy industry has managed to rebound as much as investors had hoped, and ongoing issues in the wireless telecommunications and pharmaceutical industries have hurt some other key Dow components. This year certainly isn’t the first time that the Dogs have gotten off to a slow start, only to bounce back later in the year.

dog of the dow 2017

Research shows over long-periods, the Dogs method tends to result in superior risk-adjusted performance relative to market averages. However, the method may also results in more volatility and short-term underperformance. Studies have analyzed the Dogs method in Finland; Japan; China, and six small nations in south-east Asia.

Kevin L. Matthews II is a No. 1 bestselling author and former financial advisor. He has helped hundreds of individuals plan for their retirement in addition to managing more than $140 million in assets during his advisory career. In 2017, he was named one of the Top 100 Most Influential Financial Advisors by Investopedia. When comparing the Dogs of the Dow to the S&P 500 since 2010, the performance is also very similar with the Dogs returning an average of 13.6% per year compared to 13.9% per year for the S&P 500. “While they have produced similar returns over that 12-year period, some individual years have seen quite a divergence in performance,” says Johnson. “In 2020, for example, the DJIA gained 7.2% while the Dogs suffered a loss of 12.7%. The Dogs also underperformed in 2021, when the Dogs generated a return of 16.3% versus 20.8% for the DJIA,” he continued.

The strategy is to focus on the dogs, with the idea being that they’re near the bottom of their business cycles and are poised to bounce back. High yielding stocks have outperformed the Dow with an annual return of 14.3% versus the benchmark’s 11% between 1957 to 2003, according to Investopedia. The idea is to pick the 10 highest yielding stocks on the Dow and adjust the portfolio at the end of each year to reflect changes in dividends. The Small Dogs of the Dow, which are the five lowest-priced Dogs of the Dow, outperformed both the Dow and S&P 500 with an average annual total return of 12.6 percent.

If we were to buy CSCO shares at $30.75 per share, our capital requirement would be a minimum of $3,075 plus commissions ($30.75 times 100 shares). More importantly, the capital required is roughly 75% to 85% less than the cost of owning the stocks required to follow the Dogs of the Dow or Small Dogs strategy. Oftentimes, most of the stocks will remain on the list from one year to the next, simplifying things from a tax perspective and helping to lower commission costs. And if you want to pick up CSCO shares cheap, you’ll have to act soon — the company is slated to release its quarterly earnings report after the close this Wednesday.

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Additionally, if CVX dips below $105 ahead of expiration, you can pick them up for $105, still pocket the $55 premium and reap the dividend. The oil baron has seen many false starts in 2017, as oil prices bounce around on promises from OPEC to extend production cuts, surprise drawdowns in U.S. petroleum supplies and hints of slackening global oil demand. But, if you’ve been long the Dow for the past several weeks, you’re likely more than calculated bets a little disappointed. The Trump rally appears to have fizzled out, and many Dow stocks are now treading water and consolidating year-to-date gains. Enter your email address below because we’ll send you inside info on the best performing deep value investing strategies today PLUS a free copy of The Broken Leg Investment Letter. Notably, shares of GE have fallen more than 40 percent this year, and its dividend sits at 2.7 percent.

  • Shares have shown little motivation to break out of this trading range, leaving Exxon longs with few options in terms of returns.
  • The weekly chart for Cisco is negative with the stock below its five-week modified moving average of $44.76.
  • The tariff situation and weak local overseas currencies could squeeze earnings in 2019.
  • Therefore, it would not necessarily sell or buy a security unless that security is removed from or added to the underlying index, respectively.
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A strategy is similar to a traditional covered-call strategy, with one exception in the mechanics. Rather than buying 100 or more shares of stock, an investor simply buys an in-the-money LEAPS call and sells a near-term out-of-the-money call against it. With a little more than half the year to go, I suggest revisiting the Dogs of the Dow strategy now to add some much-needed oomph to your portfolio before rising interest rates completely eat into yield returns. Snapping up these mid-year dogs can be accomplished easily via options — and may even earn you some much-needed cash in the process. The unique institutional environment of China‟s stock markets provides a rich setting to study the relationship between investors‟ behavior and market returns in the case of information inefficiency. There are some Dow stocks that pay out less than 30% of their cash flow.

Tips for Finding Your Next Great Stock Pick

Investors purchasing this portfolio are supposed to allocate 10% of their investment dollars to each stock. This means a different number of shares for each company are bought, since their market prices will be different. Fortunately, several mutual funds have responded to the popularity of this investment strategy, and it’s possible to purchase mutual funds that follow the Dogs of the Dow Theory. Cisco began 2018 above a “golden cross” set on Oct. 16, 2017 when the stock closed at $33.54. A “golden cross” occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. The horizontal lines are my semiannual value level of $41.15, my quarterly pivot at $46.16 and my monthly risky level of $48.27.

The stock ended 2016 with a dividend yield of 3.84%, and now yields 3.66%, still in the top ten. International Business Machines ended 2016 with a dividend yield of 3.55% and it’s now cheap at 4.09%, the second cheapest among the eight dogs. November ended with the Dow setting an all-time intraday high of 24,327.82, well above all of my targets for 2017.

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