Dogs of the Dow 2024: Cheap Dividends, But Are They Values?

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The 2024 Dogs of the Dow are particularly homely hounds—which means we’re talking big dividends.

This year’s Dogs yield more than three-times the broader market’s paltry payout. So, should we hold our noses and buy? Let’s grab some peanut butter treats and investigate. But first, a review of the “Dogs” strategy.

The “Dogs of the Dow” strategy means buying the Dow Jones Industrial Average’s laggards. It’s a simple three-step strategy that often outperforms in the year ahead:

  • Step 1: After the final trading day of the year, identify the 10 highest-yielding stocks in the Dow.
  • Step 2: Buy all 10 stocks in equal amounts and hold them for a year.

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Looking for the Dogs of the Dow, 2023 edition? You came to the right place.

We’ll explore these 10 blue-chip dividend bargains in a moment. Collectively, they are yielding 4.5%! But first, a quick recap of the strategy and homage to its 2022 “mini miracle.”

Last year was a dumpster fire for most mainstream investors. The market-at-large dropped 18%. “Safe” bond funds shed 25%, 30% or more. Yikes.

But the dogs ran. Not only did they outpace the market, but they delivered positive gains!

Who were these income greyhounds? And what’s the lineup for ’23? First, a refresher on this simple three-step strategy:

  • Step 1: After the final trading day of the year, identify the 10 highest-yielding stocks in the Dow.

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Once upon a time, it was hard to find an income strategy much better than the idiot-proof “Dogs of the Dow.”

And hey, in this wild market in which the S&P can drop 2% in a couple of hours, this sounds pretty good. Let’s buy some blue chips and earn 3x more income than the broader market.

Which Dogs are paying the biggest dividends for 2022? As a group these battleship businesses are paying 3.8% versus just 1.2% for the broader market. We’ll review them in a moment. First, the Dogs of the Dow rules:

  • Rule 1: After the final trading day of the year, identify the 10 highest-yielding stocks in the Dow.

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Everyone wants to be a contrarian investor. But in practice, most people buy more near tops and sell shares low.

Our human nature becomes tricky during times like these. Markets are ticking near all-time highs and many investors fear “missing out” on the next leg higher.

If you’re a premium subscriber of mine, your portfolio should be in good shape. It’s mostly to fully invested and has had a great run over the past twelve months.

But—you may have some spare cash that you’re staring at. Or dividends waiting to be reinvested.

Should we buy now? Or wait (hope) for a pullback?… Read more

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Everyone wants to be a contrarian investor. But in practice, most people buy more near tops and sell shares low.

Our human nature becomes tricky during times like these. Markets are ticking near all-time highs and many investors fear “missing out” on the next leg higher.

If you’re a premium subscriber of mine, your portfolio should be in good shape. It’s mostly to fully invested and has had a great run over the past twelve months.

But—you may have some spare cash that you’re staring at. Or dividends waiting to be reinvested.

Should we buy now? Or wait (hope) for a pullback?… Read more

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For income investors, dividend strategies don’t come any easier than the “Dogs of the Dow.”

But does this simple technique still work?

We’ll look at the 2021 Dogs, and their attached dividends (and prospects) in a moment. Their yields aren’t too shabby, averaging 4.1% in a 1% world! First, let’s review the mechanics of the popular contrarian strategy:

  • Step 1: After the final trading day of the year, we identify the 10 highest-yielding stocks in the Dow.
  • Step 2: We buy all 10 in equal amounts.

That’s it. In just a couple of quick steps, executed just once every year, we can put together a mini-portfolio of 10 blue-chip stocks that typically out-yield the S&P 500, and currently offer 2.5 times more dividends than the broad market index.… Read more

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This single chart (from Yardeni Research) reveals the secret to 55.8% dividend yields:

The Power of Dividend Growth

Source: Yardeni Research

What are we looking at here?

Simply this: if you’d invested in the average S&P 500 stock back in 1970, you’d be yielding 55.8% on your original buy today. (And in just a few minutes, I’ll reveal 5 stocks whose strong payout growth will get you there a lot faster than that.)

Think about that: 55.8% is more than half of what you originally invested—returned to your pocket every year in dividend checks!

Even if you didn’t buy in till 1990, you’d still be yielding a hefty 14.6% today.…
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Let’s dive into the General Electric (GE) dividend massacre that sent the market reeling last week. When the dust settled, the payout took a 50% haircut, and the stock had plunged about 11%.

Before I go on, I should tell you that GE isn’t the only household name I’m worried about. Further on, I’ll show you another investor “sacred cow” that’s showing some eerily similar signs. Then we’ll look at an unloved pharma play that’s more than worth your attention now.

First, let’s pick through the GE wreckage and see what we can learn, and where the stock could go from here.…
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Let’s talk about the only “market timing” strategy that actually works in practice – buying a stock before it announces a dividend hike.

In a minute, I’ll show you seven stocks that are likely to announce generous hikes next time they talk to Wall Street. Their stock prices will then follow their payouts higher in the ensuing months.

This “undercover income strategy” is the closest thing to a sure thing you’ll find in the financial markets. Everyone loves the dividend, but investors usually don’t give enough love to the dividend hike. Not only do these raises increase the yield on your initial capital, but also they often are reflected in a price increase for the stock.…
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