Do you like the Dogs of the Dow Strategy? If you’re curious, these are the 10 companies that currently screen as the highest in the Dow Jones Industrial Average: 2019 Dogs of the Dow Companies: IBM, XOM, VZ, CAT, CVX, KO, PFE, INTC, DWDP, PG
I like the methodology however I would use it as a filter to find some good investments rather than a blind strategy. would love to know your analysis of the oligarchy that is the Canadian Banks.
@@MikeHeathGallagher I would think some filters could make this even better. And I'll see what I can find on the Canadian Banks, that sounds interesting.
Hey great overview for the dogs strategy. I personally have dividend growth portfolio bought at the dip december 2018 up now 14.6% with YOC 4.72% (Just started) was wondering live in Denmark btw. Could you apply the dogs strategy in several countries like 10dogs of US 10dogs china 10dogs EU like germany, france, UK etc. Couldn't really find an industry index like the Dow for each of the countries or else i missed. Love too hear your take on this. Thanks in advance and great videos on this channel !!
That's a great idea, I'll see what I can dig up. Even if there isn't an index like the dow for other counties, maybe we could apply similar rules as it how the dow is created, then create our own sort of index, then test the dow 30 rules against our index for different parts of the world.... Thanks for the support BTW :)
@@LearntoInvest Thanks for the reply ;) looking forward too see what you find. Yea it makes sense too filter stocks "just" using the same criteria the dow uses. Hindsight what i meant was a "world" dog portfolio of say 30 stocks in 3 countries 10 in each country if that wasn't clear >_< currency diversification in mind
I like your video and analysis. I actually went back to 1957 and took the time to pull up the Dogs of the Dow for each year and analyze using Michael O'Higgins' strategy. The Dogs FAR outperform the Dow and S&P 500. I also tried to use a 10% stop on each of the Dogs and this prevents losses like with GM in 2009. One would stop out of a stock if it drops by -10% and then just keep the remaining funds in a money market until the following January. This prevents capital losses on really bad years like 2009.
Dogs of the dow is one of the strategies I follow. It has worked so far for me. I like the simplicity and the high yield you get. There is a different version of this: small dogs (puppies) of the dow. I did that also but to volatile for me. With this you do the same but don't buy the top 10 but only 5 of the top 10 with the lowest share price. Maybe you can make a video about that? Should perform even better.
That's a good idea, I considered throwing that one in this video, but I was trying to keep it somewhat short. Another video on that one sounds like a good idea.
5:35 Re. diversification - I wouldn't put an entire equities portfolio into a Dogs strategy, (or any single strategy) but I would readily put a substantial portion of it, 1/4 to 1/3 of it, into those 10 stocks (or 5 if you do the Small Dogs approach). I would keep the remainder in other things such as a chunk in an S&P index fund, a couple of REITs, a handful of Blue Chip value stocks, and so forth.
Needs a qualifier or two, like the published Fool qualifier of eliminating the highest dividend yield if it is the lowest priced stock, or minimum acceptable payout ratio, or possibly a moving average momentum qualifier , to protect against systematic losing stock selection bias.
It seems that it does better in a bull market, but worse in a bear market. Weird considering the higher dividend yield should offset some capital depreciation. Or 2006-2009 was just unlucky for this strategy.
This is a strategy I like. Apparently I've been doing it and didn't even know it. I've been doing deep analysis of stocks before I buy and the ones that have been fitting my criteria happen to be in the Dow. I've gotta tell ya. It sure is a boost to the ego to know that the strategy I've come up with on my own has been proven to be tried and true for decades.
Well, I think it gives you a higher return in exchange of higher volatility, so in the end both methods are, to some extent, equivalent in terms of risk/reward. What about this one: Take the first 20 stocks of the S&P500, or maybe the first 20 after the first 10 (from 11th to 30th) and build an equally weighted portfolio (5% each). At the end of the year, you sell whatever goes out of the ranking and buy whatever enters it. Also, rebalance to make everything equally weighted again. In essence it would be like a mini index. The good thing is that you will catch the stocks that are on their way to the top. The bad thing is that you will also catch the ones that are going down, but the same happens in the index itself. I´ve been trying to back test this method but I don´t have reliable data. If you can do it, it would be great!
@@LearntoInvest I´ll really appreciate if you can do it. I´ve been thinking about this for quite a while and I need to know if it works or not. Thanks!
Great video! Couple of questions: Does the returns allow for the fact that dividend income is taxed differently than capital gains, and also additional transaction costs associated with reinvesting dividend income? Is there anything particular about this relationship with the Dow other than that was the original strategy? Would it work with the S&P 500 or the FTSE100?
I have a relatively small portfolio, there for my trading costs, eat up a lot of my profit when I rebalance my dogs each year. Due to this factor, so far this year I haven’t reshuffled any advise on the danger of playing this way would be much appreciated.
How does this work when a company leaves the Dow? Or if another company falls hard and goes on the bottom 10? Do hou pick the companies regardless of their balance sheet? My personal strategy resembles more a Ray Dalio approach. The simple version. I hold commodities, fixed income, REIT's and mostly dividend stocks. I do have a few speculative plays but overall less the 5% (companies just breaking into positive numbers). I usually look for dividend stock that have good numbers and pay roughly above 3% dividend.
With this strategy, it's pretty hands off, you only need to touch it once a year and only have the top 10 at the start of each year. I think the assumption is if there in the dow they are strong, although we know that's not always true. And I love the Dalio all weather approach, it's incredibly consistent.
@@LearntoInvest Dalio makes the most sense to me right now as in an all weather portfolio always something is on sale. Not doing long-short positions, but rather move to the more stable companies and also pay me a nice and growing dividend. That should be a double compounding effect with capital appriciation mixed with rising dividends as well
Question..in each year you buy the top 10. Do you sell at the end of year to repurchase the new top 10 or do you add the newest ten to the holdings you already have from previous year? Great vids!
Let's pretend Verizon made the list two consecutive years. It's likely to be best to just hold it. That way you only sell the ones that fall off the list and add the new ones. :)
I’m new but love your videos, but my question is about timing of a sale. If one falls off your list, since it’s on a dividend schedule should u just hold it till the dividend gets paid then dump it right away? Is there grace periods for joining or dropping a dividend stock?
Well in the back test I ran for this strategy, I assumed we bought and sold only at the end of the year. So outside of that one day of trading each year, this was a fairly hands off strategy
Curious also if this could be applied to other markets. For example, could I take the FTSE100 and pick say, 25 "f-up's of the FTSE" and apply, potentially smoothing out the risk and reward? Or does the nature of other markets, including say the S&P, not make this possible in some way? I have my 2021 plan already mapped out, but I am curious about trying this in 2022 and seeing how we do. (I have a couple of portfolios, so I'd only be "experimenting" with about 1/6 - 1/7 of my planned holdings by then, which seems tolerable)
Its an interesting idea, not for me at this moment. Not discarding doing something like that in the far future. I rather diversify within the sector with a pick and shovel strategy mixed with Dividend Aristocrats. I'm just not good at picking a good growth company at this moment.
logically it should since you're basically buying relatively cheap companies, and as we all know, paying for a stock less would increase your potential returns in the future
The Motley Fool championed this in the 1990s, but dropped it when it proved to not be as reliable as initially thought. I consider it a debunked strategy, like invading Russia in the winter.
