The Dogs of the Dow: Puppy Love For Your Portfolio!

Point View's David Dietze.

Despite a pricey, aging bull market, long term investors must stay the course. To reduce risk, look for out of favor, inexpensive, dividend yielding stocks.  An interesting and profitable way to do that is the Dogs of the Dow strategy.  

The “Dogs” are the ten-highest yielding Dow stocks as of each January 1. This classic strategy divides your portfolio by ten and invests an equal amount in each at the year’s start.  At year end, liquidate and repeat.

The strategy has a successful long-term record. Ending 12/31/16, the Dogs strategy has bested both the Dow itself and the S&P 500 over the last year, three years, five years, and decade.  

Sign Up for E-News

Studies have shown that dividend payors outperform with less risk. If dividends are being paid, profits are more likely being generated.  Buying the high yielders introduces a value discipline. Many companies pay dividends, but insisting on high yielders reduces the risk of overpaying.

Sticking with Dow stocks reduces further risk. Dow components are invariably industry leaders, with unusual resources that permit them to attract top talent and take a longer term approach.  

This looks like an opportune time for the Dogs because value stocks are so out of favor. The Dogs themselves, a type of value strategy, have lagged year to date, returning just 5.4% this year versus the Dow’s 10.4% and the S&P’s 9.1%. In fact, the small Dogs have returned just 3%

We believe markets and prices revert to the mean. At some point, after money has chased the outperformers long enough, the abandoned stocks become too cheap and flows reverse. Value stocks are attractive under that analysis.

Couple the Dogs strategy with other fundamental research. Use the ten Dogs as an initial screen. You could then select those Dogs from weak industries. If an entire industry is weak, the apparent cheapness of a Dog within that group may not be an issue intrinsic to the company. Entire industries don’t disappear in the same way that an individual company might.

Research the Dogs based on other proven strategies. Free cash flow is critical, so a low stock price relative to that free cash flow is a great screen. Consider, too, for very cyclical companies, a low stock price relative to revenues per share. Low price to earnings ratios and low debt levels also make intelligent additional inquiries.

Our Favorites Today    

Exxon (XOM) and Chevron (CVX) are at the top. Energy is by far the worst performing sector this year.  Exxon and Chevron have lagged the Dow and the overall market dramatically, down 12.5% and 5.3% respectively, consistent with the industry. Exxon’s yield is just over 4%, the Dow’s third highest, while Chevron’s is just shy of 4%, the Dow’s fourth highest.

General Electric (GE) looks appealing. At 3.9% it boasts the Dow’s fifth greatest yield.  If you are attracted to the small Dogs performance, GE has the (dubious) distinction of having the lowest share price, now under $25 per share. This conglomerate must turn operations around; expect to see calls to break up if results don’t improve fast.  GE has already taken the first step, switching CEOs.

Finally, consider Pfizer (PFE). The health care sector has been battered by political concerns; leaders on both sides of the aisle debate the Affordable Care Act amid hand wringing over medical costs. Pfizer’s competitive advantages, its financial strength, its robust research and development program, and largest sales force in the world will ultimately allow it to thrive no matter what happens in Washington. Its stock price is the Dow’s third lowest and its yield at 3.8% the sixth highest.  

Note: David G. Dietze, JD, CFA, CFP™ is President and Chief Investment Strategist of Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Avenue, Summit. 

For nearly 25 years, Point View Wealth Management, Inc. has been working with families in Summit and beyond, providing customized portfolio management services and comprehensive financial planning, to develop and achieve their financial goals. Click here to contact David DietzeJohn PetridesClaire TothDonna St.Amant, and Elaine Phipps, or call 908-598-1717 to learn more about Point View Wealth Management, Inc. and how we can help you and your family meet your financial objectives. To sign up for our complementary commentaries and newsletters, e-mail us at

CNBC has named Point View one of the Top 100 fee-only wealth managers in America.

The opinions expressed herein are the writer's alone, and do not reflect the opinions of or anyone who works for is not responsible for the accuracy of any of the information supplied by the writer.

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News


Upcoming Events


Wed, March 21, 7:00 PM

Summit Free Public Library, Summit

Networking and Interviewing 'IQ' Workshop

Arts & Entertainment Business & Finance Education Other

Thu, March 22, 12:00 PM

SAGE Eldercare, Summit

FREE Tax Assistance

Community Calendar


Thu, March 22, 4:00 PM

Summit Free Public Library, Summit

Gr. K-5: Programs with Mrs. Wheeless

Arts & Entertainment Education

Summit Fire Department Blotter

01/01/2018 9:26 am     FD dispatched to a motor vehicle accident, car vs. pole in front of 196 GLENSIDE AVENUE.  On arrival occupant was out of the vehicle.  Summit EMS assumed patient contact. FD made notification to the power company to make repairs.  Summit PD remained on scene for traffic control and road closure until repairs were made.

01/02/2018 7:36 pm ...

Summit Police Blotter

March 12, 2018

3/3 - Daniel T. Lipkin, 20, of Millington was arrested and charged with possession of marijuana, possession of paraphernalia and possession of an alcoholic beverage under legal age. Mr. Lipkin was processed and released with a pending court date.

3/3 - Taurino Alday-Benitez, 28, of Summit was arrested and charged with driving while intoxicated. Mr. Alday-Benitez was processed and released with ...

JCP&L Preparing for Third Nor’easter to Potentially Impact Region

March 20, 2018

Jersey Central Power & Light (JCP&L) is preparing for the third Nor’easter to hit the region in the past two weeks that could produce more than a foot of heavy, wet snow and the potential for wind gusts up to 45 mph in its northern and central New Jersey service areas beginning early Wednesday. 

JCP&L personnel have implemented storm and staffing plans and are prepared ...

Video: Point View's Dietze Talks Bond Surrogate Bargains

Point View Wealth Management's Founder, President and Chief Investment Strategist, David Dietze, live on BNN / Bloomberg on finding investment opportunities among bond surrogates:

For nearly 25 years, Point View Wealth Management, Inc. has been working with families in Summit and beyond, providing customized portfolio management ...

Profit from Recent Volatility with Stock Market Bargains

Markets retreated in February, the worst down month in two years. A record surge in volatility caused several ETFs designed as leveraged bets on low volatility to plunge, with at least one being forced to liquidate and hand its investors a near total loss.

The Causes of February’s Market Retreat

The initial catalyst for the sell off was inflation. The January jobs report showed ...


AtlantiCast: Episode 13

On this episode of AtlantiCast, new clinical studies in the fields of cardiology and immunotherapy, national and statewide recognitions for Atlantic Health System medical centers and the inaugural AtlantiCast Collab Challenge!


Coffee, Tea or Fleas?

Two ducks are on a flight to Miami.  The first duck says to the second, “you flying south for the winter?”  The second duck replies, “Oh wow, a talking emotional support duck!”


Pa rum pum.


There have been a lot of news stories lately about animals traveling on airplanes.  Some are humorous, like the woman who recently tried to bring ...

Learn a Language @ Your Library

Anyone can learn a language at the Summit Free Public Library!

Did you know that the Summit Library has a subscription to Muzzy Club? Funded by a grant from the Union County Board of Chosen Freeholders, Muzzy Club is an online resource that allows Summit Library cardholders of all ages to learn a new language. Languages in Muzzy Club include British and American English, Spanish, ...