Dogs of the Dow List 2024 - Does it Work & How to Invest?

In this article, we explore the popular investment strategy called Dogs of the Dow, its historical performance and how to get started with it today. While no investment strategy can predict the future, the Dogs of the Dow can serve as a good basis to build upon with more research and analysis.

What is Dogs of the Dow?

What is Dogs of the Dow? Dogs of the Dow is an investing strategy that uses the highest dividend yield stocks in the Dow Jones 30 index each year. Before we look at the mechanics of the strategy, how it works and its historical performance, let's first understand the Dow Jones index in more detail, as well as the term 'dividend yield'. If you are already familiar with these then go ahead and jump straight to the next section on how the strategy works.

The Dow Jones 30 Index

The Dow Jones index is referred to by several different names including the Dow Jones Industrial Average index, the Dow 30 and - most of the time - just 'the Dow'. The index was created in the late 19th century by Charles Dow and is a price-weighted average of 30 publicly traded companies in the United States.

▶️ The 30 companies are large blue-chip companies from all different sectors, including financial, technology, consumer goods, health, energy, industrials and materials - but not from transportation or utilities.

▶️ The 30 stocks that make it into the Dow 30 are overseen by a selection committee by the S&P Dow Jones Indices company. 

At the start of 2024, the stocks in the Dow Jones 30 index included:

1. American Express Co
2. Amgen Co
3. Apple Inc
4. Boeing Co
5. Caterpillar Inc
6. Cisco Systems Inc
7. Chevron Corp
8. Dow Inc
9. Goldman Sachs Group Inc
10. Home Depot Inc
11. Honeywell International Inc
12. International Business Machines Corp
13. Intel Corp
14. Johnson & Johnson
15. Coca-Cola Co
16. JPMorgan Chase & Co
17. McDonald's Corp
18. 3M Co
19. Merck & Co Inc
20. Microsoft Corp
21. Nike Inc
22. Procter & Gamble Co
23. Travelers Companies Inc
24. UnitedHealth Group Inc
25. Salesforce.com Inc
26. Verizon Communications Inc
27. Visa Inc
28. Walgreens Boots Alliance Inc
29. Walmart Inc
30. Walt Disney Co

Dividend Yield

The dividend yield refers to the annual dividend payment the company pays to its shareholders. Typically, it is expressed as a percentage of the stock's current price. It is a widely used metric to also help identify undervalued shares which you can learn more about in the ‘What is Value Investing?’ article. 

▶️ EXAMPLE: Let’s assume Intel’s closing price was $69.69 and that the company pays $3.28 in annual dividends to anyone who holds their stock. That translates into a 4.7% dividend yield ($3.28 / $69.69 x 100). 

Companies with a depressed share price tend to boost the dividend yield. This is why it is used as a filter to find undervalued stocks. This becomes even more interesting when using it on the Dow Jones 30 index as the companies in the index tend to represent the strongest companies in the economy whose job is to get their share price higher.

You can learn more about dividend stocks in the ‘Best Dividend Stocks for Income’ article. Now that we know more about the Dow 30 and dividend yields, let's look at how the Dogs of the Dow investing strategy uses them.

How Does the Dogs of the Dow Strategy Work?

The investing strategy works on the premise that last year's laggards may well be this year's leaders. The Dogs of the Dow strategy uses this theory by investing in the top ten highest dividend yield stocks from the Dow 30 index at the beginning of each year.

The Dogs of the Dow Step-by-Step Process

1. At the beginning of the year, identify the top 10 highest dividend yield stocks from the Dow 30 list.
2. Then divide the total amount of money you want to invest into 10 equal parts.
3. Using each part, buy shares in each of the ten Dow stocks listed in the first step.
4. Hold these stocks until the end of the year.
5. At the end of the year sell the existing Dogs and then repeat the overall process again.

While it may sound simple, does it actually work?

Does the Dogs of the Dow Investment Strategy Work?

The aim of the Dogs of the Dow strategy is to find undervalued blue-chip companies. It relies on the premise that blue-chip companies are relatively stable and do not alter their dividend payouts based on short-term business conditions.

So, if a company's stock price falls and the dividend payout stays the same, the result is a higher dividend yield - which is why the Dogs of the Dow strategy uses this as a filter to identify laggards who could turn into leaders.

After all, if a blue-chip company's stock price has fallen it could mean they are at the bottom of its business cycle. Once conditions are more favourable, the stock price could start to appreciate again - thereby making it favourable for any Dogs of the Dow investors.

Dogs of the Dow Performance History

From 2007 - 2009 the Dogs of the Dow strategy suffered three consecutive defeats against the Dow 30 index. However, since then the investment strategy has fared much better:

• 2010 saw the Dogs gain 16% and the Dow 9%.
• In 2011, the Dogs outperformed the Dow by 11%.
• In 2012, the Dogs and the Dow both came in around 10%.
• 2013 saw the Dogs outperform the Dow with 35% against 30%.
• In 2014, the Dogs gained 11% while the Dow gained 10%.
• In 2015, the Dogs gained nearly 3% while the Dow broke even.
• 2016 saw the Dogs perform well with gains of 20% against the Dow's 17%.
• In 2017, The Dogs of the Dow underperformed the Dow index with 19% against 25%.
• The Dogs of the Dow 2018 suffered a 1.5% loss whereas the overall Dow suffered a 6% loss.
• The Dogs of the Dow 2019 posted gains of 15.4% underperforming the Dow index which recorded a 22.3% gain. 
• The Dogs of the Dow 2020 recorded a loss of -12.6% while the overall index recorded gains of 7.2%.
• The Dogs of the Dow 2021 recorded a gain of 25.3% compared to 21% for the Dow Jones 30 index. 
• The Dogs of Dow 2022 recorded a gain of 2.2%, outperforming the Dow Jones 30 index which lost -8.8%.
• The Dogs of Dow 2023 recorded a gain of 10.1% which was lower than the 14.4% gain on the Dow Jones index.

Did you know that you can create a portfolio of dividend-paying stocks with the Admiral Markets Invest.MT5 account? You can open an account with only €1 and enjoy minimum transaction fees of just $1 on US stocks.

How to Invest in Dogs of the Dow in 4 Steps

There are many ways to participate in the Dogs of the Dow strategy. Some may use the possible appreciation in a Dog's stock price to trade individual stock CFDs (Contracts for Difference), thereby taking a shorter-term outlook. However, the strategy is intended to hold stocks throughout the year while also collecting any dividend payments. It's worth remembering the strategy specifically looks for high dividend-yield stocks - dividends are a source of income for many investors.

The Admiral Markets Invest.MT5 account may be more suited for this particular investment strategy as it allows you to buy physical shares, collect dividend payments with zero account maintenance fees, and offers trading commissions starting at just $0.02 per share with minimum transaction fees of just $1 on US stocks.

1. Open an account with Admiral Markets to access the dashboard.   
2. Click on Trade on one of your live or demo accounts to open the web platform.   
3. Search for your stock in the search window at the top right to view the live price chart. 
4. Click Create New Order from the bottom of the screen to open the trading ticket. 

You can also stay up to date with all the latest market trends through the Admiral Markets Spotlight webinar series. Three times a week, three professional traders talk through the markets, providing you with the latest insights and strategies to use. Register for your complimentary spot today by clicking on the banner below:

What are Dogs of the Dow for 2024?

If you are interested in the new Dogs of the Dow for 2024, here is the list as of 5 January 2024:

Source: Nasdaq Dogs of the Dow 2024.

Why Invest in the Dogs of the Dow with Admiral Markets?

If you are thinking of taking a long-term view of the stock market and would like to invest in public companies from around the world you may consider the Invest.MT5 account where you can enjoy benefits such as:

• The ability to invest in thousands of stocks and exchange traded funds (ETFs) from 15 of the largest stock exchanges in the world.
• Open an account with just €1 minimum deposit and invest from just $0.02 per share with minimum transaction fees of just $1 on US stocks.
• Receive free real-time market data, with no delays, at no extra cost. Create a stream of passive income by collecting dividend payouts.
• Use the world-renowned MetaTrader 5 multi-asset class trading platform.

Continue Reading:

• What is the Dow Jones Index? Investing Strategies
• How to Trade the US Stock Market Online
• The Best S&P 500 ETFs
• 6 Top Trading Strategies

FAQs on Dogs of the Dow

About Admiral Markets

Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.