This figure represents the collective dividend yield of these stocks, showcasing their appeal to income-focused investors seeking dividends as a source of returns. In essence, the Dogs of the Dow strategy is about using the power of dividends and blue-chip stocks to your advantage. It’s a straightforward approach that doesn’t require constant monitoring or complex maneuvers. Instead, it’s a “set it and forget it” strategy that appeals to investors looking to simplify their approach while potentially reaping the benefits of dividend income and stock price appreciation. Since the portfolio is rebalanced and reallocated every year, there is the potential for significant tax costs weighing on realized returns. By rebalancing to the highest-yield components of the Dow, investors following this strategy will often sell some — or even all — of their biggest gainers from the prior year.

• The stock is down 42% for the year-to-date, following a disappointing second-quarter performance where its EPS was off 79% year-over-year, and revenue dropped 17%.
• 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.
• All but one of the 28 thrusters seem OK, but the fear is that if too many conk out again, the crew’s safety could be jeopardized.
• The company has been losing market share to competitors after falling behind Advanced Micro Devices (AMD) in chip innovation and to Taiwan Semiconductor Manufacturing (TSM) in fabrication.
• As a tactic, Dogs of the Dow goes like this—after the stock market closes on the last day of the year, select the 10-highest dividend-yielding stocks in the DJIA.

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The latest example was in 2021 when the company spent nearly $46 billion – more than any other major telecom company – on broadband licenses in anticipation of a 5G world that has yet to materialize. Remember, it was just three years ago that Dow was spun out of DuPont (DD), and is still finding its sea legs. This year’s crop of Dogs seems to face thornier problems than in years past. 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. The success of the Dogs of the Dow has a lot of investors taking a closer look at the strategy to see if it can keep outperforming in the coming year.

How the Dogs of the Dow Strategy Works

The term “dogs” refers to the strategy of looking for the highest-yield Dow stocks, which are typically the ones that are viewed as being out of favor with investors, or “in the doghouse.” This should mean that companies with a high dividend relative to stock price are near the bottom of their business cycle, so their stock price likely would increase faster than companies with low dividend yields. In this scenario, an investor reinvesting in high-dividend-yielding companies annually would hope to outperform the overall market. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.

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Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. But ultimately, every dog has its day, and the ones that were at the bottom of the heap many times show up at the top. For the 20 years ended 2020, the Dogs of the Dow strategy returned 9.5% versus 7.5% of the S&P 500, a spectacular beat. It underperformed the S&P 500 in 2021 by 16 percentage points and so far this year, the Dogs are down less than the market at large.

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It’s essential to research each option thoroughly, considering factors such as fees, historical performance and specific stock holdings, to determine which best suits your investment goals and risk tolerance. These investment vehicles provide a convenient way to implement the Dogs of the Dow strategy while benefiting from professional portfolio management and diversification. https://investmentsanalysis.info/ To execute this strategy, you would divide your investment capital equally in ten ways if you utilize the standard Dogs of the Dow strategy. Then, you would use your brokerage account to invest equally in all ten companies. However, if you are using the live list to invest, you would decide how many top Dogs you want to invest in, for instance, fifteen.

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Treasury yields also climbed in the bond market in a signal investors are feeling less worried about the economy after a report showed fewer U.S. workers applied for unemployment benefits last week. Faring even worse was Walgreens Boots Alliance (WBA 0.74%), which was the Dow’s worst performer, with losses of close to 30% on the year. A new emphasis on building a more comprehensive healthcare business that includes making primary care clinics available Dogs of the dow 2023 to customers at its store locations has hurt short-term financial results. The name “Dogs of the Dow” might sound intriguing, but it simply references the stocks that make up this strategy. These “Dogs” are not underperforming or problematic stocks; they are the highest dividend-yielding stocks among the 30 components of the Dow Jones Industrial Average (DJIA). This is a simple yet captivating approach to investing in the stock market.

Further, it forecast current-quarter sales below expectations and said it expects a $400 million hit to core profit from cost and inflationary pressures. Yet for some investors, the prospect of owning solid stocks with an average dividend yield of 4.4% is too good to pass up. Regardless of whether the Dogs of the Dow outperform the stock market in 2023, many will find that the simple strategy gives them an easy way to get market exposure without a lot of hassle. That’s all it takes, and there’s nothing more to do until the end of the year. At that point, you can either close out the strategy or continue into the next year.

Without further ado, here are the 10 stocks that will comprise the Dogs of the Dow for 2023, along with an explanation of the strategy behind them. Wilmore and Williams’ suitcases were removed from Starliner before liftoff to make room for equipment urgently needed for the space station’s urine-into-drinking-water recycling system. A supply ship finally arrived this week with their clothes, along with extra food and science experiments for the entire nine-person crew. Despite the fat reserves, NASA would like to get back to normal as soon as possible.

Despite supply chain issues, Cisco benefited from strong demand for network equipment, and it sees growth picking back up in the near future. Rising oil prices during 2021 helped Chevron rise, while Walgreens bounced back from adversity to benefit from people needing health services. Additionally, because blue-chip companies are known for their stability and consistent dividend policies, the Dogs of the Dow strategy offers a sense of reliability to investors.

Dow has strategically located its facilities close to low-cost sources. The gray cloud hanging over Intel is writ large in the initial public offering (IPO) of its Mobileye Global (MBLY) unit which it acquired for $15.3 billion in 2017. The once ebullient valuation of $50 billion was significantly lowered to $17 billion – just a tad more than what Intel originally acquired it for – when the self-driving car company went public late last month.

The Dogs of the Dow strategy presents investors with a straightforward yet effective method for capitalizing on the income-generating potential of blue-chip stocks. By honing in on dividends and selecting the highest yielders from the Dow Jones Industrial Average, this strategy offers an accessible approach that doesn’t require complex analysis or constant monitoring. Its historical performance often closely aligns with that of the broader market, making it an appealing option, particularly during periods of value-focused investing. The process repeats, and investors identify the 10 DJIA stocks with the highest dividend yields for the current year. These new selections become the Dogs for that year, and the portfolio is adjusted accordingly. This annual rebalancing allows the strategy to focus on the highest-yielding stocks yearly.