Dogs of the Dow Definition & 2008 List

Definition of Dogs of the Dow


The dogs of the dow are the 10 stocks which pay the highest dividend relative to the current stock price.  The basic trading strategy is to buy these stocks at the beginning of the year and to hold them throughout the entire year.  Once trading commences for the next calendar year, the investors should rebalance their portfolio to maintain the top 10 paying dividend stocks in the Dow. 

Investors believe that Dow stocks do not readjust their dividend based on the volatility associated with market moves.  The belief here is that since the companies maintain their dividend through times of crisis, the price to earnings ratio reflects the true market value for the company.  Investors see that a stock with a high dividend relative to its per share price is poised for a rally since the stock is poised to see its stock rally more than stocks with low yields.  This simple methodology has returns close to 18% a year over the last 25 years, while the Dow Jones has only returned 12%.

Dogs of the Dow and Credit Crisis of 2008


The Dogs of the Dow are on pace to have one of the worst performing years on record.  As of October 29, 2008 the Dogs of the Dow are down nearly 35% on the year.  The market still has two months left to close out strongly

2008 Dogs of the Dow


Symbol Company Yield
PFE Pfizer 7.72%
VZ Verizon 7.34%
AA Alcoa 7.23%
GE General Electric 6.95%
T AT & T 6.48%
BAC Bank of America 6.07%
DD DuPont 5.59%
MRK Merck 5.56%
C Citigroup 5.27%
CAT Caterpillar 5.05%

Tim Ord
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