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Dogs of the Dow: Long Term Investing Strategies for 2013

Rachel Fox - January 22, 2013
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Long term investing is an excellent way for more conservative people to make great money. While I much prefer making my money quickly and in a “high-risk = high reward” fashion, long term investing is great for people who are older or people who are more comfortable with safer investments.

The difficult part of long term investing is picking the right stock or group of stocks to invest in.

I just came across a very cool investing strategy that seems like an excellent option for investors who want steady income from their long-term investments via a combination of steady stock price increases and dividend payments.

The strategy is called Dogs of the Dow. It’s easy to comprehend and even simpler to execute.

Q: What is the strategy for Dogs of the Dow?

A: On January 1st, buy the previous years Dow’s top 10 highest-yielding stocks. Collect the dividends. Then, 366 days later, sell those top 10 Dow yielders and buy the top 10 Dow yielders for the next year.

Q: What is a dividend yield?

The dividend yield is a % that equates to the amount of dividend payment dollars you will receive if you own a dividend-paying stock.

In 2011, all the stocks in the Dow together only rose 8.4%. However, the Dogs rose 16.7% including dividends. That’s almost double the Dow all together.

Q: Is the Dogs of the Dow a good strategy for 2013?

A: Since taxes on dividends are staying at 15% for most people, The Dogs of the Dow looks like an excellent strategy to play.

Who are The Dow Dogs of 2013?

Company Stock Symbol 2012 Yield
AT&T T 5.30%
Verizon VZ 4.80%
Intel INTC 4.40%
Merck MRK 4.20%
Pfizer PFE 3.80%
DuPont DD 3.80%
Hewlett-Packard HPQ 3.70%
General Electric GE 3.61%
McDonald’s MCD 3.50%
Johnson & Johnson JNJ 3.49%

If you’d like to purchase fewer than 10 stocks, you can buy the Small Dogs of the Dow, aka the “Puppies of the Dow,” which is the top 5 dogs. According to

“Investing in puppies of the Dow would have resulted in a 20.9% average annual return since 1973!”

That’s not a bad return for a conservative, long-term approach.

Many Happy Returns,


  1. If I sell only the stocks that are not in the top 10 after 366 days, would that not be a better strategy?

  2. This is a neat strategy, particularly for passive investors who don’t want to spend a horrendous amount of time analyzing stocks to make an investment decision, yet want to avoid mutual funds. There are actually many variations of this that are used. One for example is to exclude the stock with the highest yield, and buy the next 10 highest – the idea being that the highest yielding stock is an outlier and there may be a good reason why it’s so cheap relative to its dividend payout (hence high yield).

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