2017 Dogs of the Dow

 

It’s Dogs of the Dow time again: A time when buying into a 1-year high-dividend paying investment strategy has proven rewarding for fans of stocks included in the Dow Jones Industrial Average. Like any investment strategy, however, results change from year to year and that’s okay. Nothing on Wall Street has ever been profitable year after year after year after year.

Keeping that bit of reality in mind, forgive me for being a few days late in getting this list of the 10 bow-wows to you. That said, the info below includes the 2016 closing price for each of the companies along with its yield at that time and was all gleaned from a recent 24/7WallStreet.com story.

A little bit of current history, the DJIA ended 2016 at 19,762.60 representing a gain of 13.4% from it’s close in 2015, according to that same source. But what’s ahead for Wall Street and the DJIA in 2017 has everyone scratching their heads.

And from 24/7WallStreet.com comes this: “The average yield for the 2017 Dogs of the Dow is almost 3.6%, down slightly from 2016 but closer to 2015’s Dogs. This 3.6% would compare to a yield of 2.44% for the 10-year Treasury and 3.06% for the 30-year Treasury. Note that all 10 Dogs of the Dow for 2017 currently out yield the 10-year Treasury by more than a full percentage, and they even out yield the 30-year Treasury by a half-percent on average. Most Dow stocks are expected to have stable earnings growth in the years ahead. There are technically 11 Dogs of the Dow, unless you back out the rounding issues.”

On that note, here are 2017’s Dogs:

–Verizon
 Yield: 4.33%. Shares of Verizon closed out 2016 at $53.38.

-Pfizer
Yield: 3.60%. Shares of Pfizer recently closed at $32.48.

–Chevron
Yield: 3.73%. Shares of Chevron last closed at $117.70.

-Boeing
Yield: 3.65%. Boeing closed at $155.68 at the end of 2016.

-Cisco Systems
 Yield: 3.44%. Cisco shares closed out 2017 at $30.22.

-Caterpillar
 Yield: 3.41%. Caterpillar shares closed out 2016 at $92.74.

– Coca-Cola
Yield: 3.38%. Shares of Coca-Cola closed out 2016 at $41.45.

-IBM
Yield: 3.37%. Shares of IBM closed out 2016 at $165.99.

-Exxon Mobil
Yield: 3.32%. Shares of Exxon Mobil closed out 2016 at $90.26.

-Merck

Yield: 3.19%. Shares of Merck closed out 2016 at$58.87.

There’s more information about each of these companies in the story titled “Meet the 2017 Dogs of the Dow: Massive Dividends and Expected Upside” written by Jon C. Ogg at http://247wallst.com/investing/2016/12/31/meet-the-2017-dogs-of-the-dow-massive-dividends-and-expected-upside/print/

 

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POCKETBOOK: Week ending Oct.15, 2016

• Love those Dogs

I’m a big fan of the Dogs of the Dow investment strategy. Maybe it’s because I love dogs. Maybe it’s because the investment strategy is simple enough for everyone to understand; you simply buy the 10 highest yielding stocks in the DJIA at the beginning of the year and let that group run until  year’s end. It’s a one-year investment plan that offers both the opportunity for the prices on the 10 stocks to do their thing with a bit of income security tossed in –dividends.

 

I’m also a fan because the strategy can pay off and this year the Dogs are doing well.

 

According to Bespoke, the Dogs were up 12.82% as of October 12. That’s way ahead of any of the major market indices.

 

More Good Boy Good Girl doggie data from Bespoke:

-All 10 stocks are up so far this year.

-8 of the 10 are up by double-digits

-Caterpillar (CAT) is up the most: 28.78%.

-Only 1 of the 10 stocks increased its dividend so far this year: Cisco (CSCO).

 

That last point is worth remembering. Why?  Because it’s a reminder that nothing in the equity world is carved in granite and just as the price of a stock can go up and down, dividend payouts can change over time too.

 

• Market Quick Glance

All four of the major indices followed here  eneded last week down continuing its downward slide.

 

That said,  even though they were down, they are still up year-to-date.

 

Below are where the weekly and 1-year performance results for four popular stock indices stood at the close of business on Friday, Oct. 14, 2016, according to Bloomberg,

 

Before going there, if you like to play “Which Way Is the Market Headed” and look at market P/Es to help,  I’ve added where the P/E Ratios for the four popular stock indices stood at week’s end.  Basically, pros say the higher the P/E the riskier the market.

 

-Indices:

 

-Dow Jones +6.28%  YTD down from last week’s 6.88%

• 1yr Rtn +8.21% down from last week’s 9.65%

P/E Ratio 17.43

 

-S&P 500 +6.17% YTD down about 1 percentage point from last week’s 7.19%

• 1yr Rtn +7.23% down a lot from last week’s 10.30%

P/E Ratio 20.09

–NASDAQ +5.23%  YTD off from last week’s 6.81%

• 1yr Rtn +8.16% down a heap from last week’s 11.06%

P/E Ratio 31.17

 

–Russell 2000 +8.00% YTD down a lot from last week’s 10.14%

• 1yr Rtn +5.90%  down from last week’s 7.73%

P/E Ratio 43.56

 

-Mutual funds

Heading South.

 

At the close of business on Thursday, Oct. 13, 2016, the year-to-date average return for U.S. Diversified Equity Funds was up 4.40%, according to Lipper. That’s down from last week’s 6.15% average and the Oct.6 year-to-date average return of nearly 7% (6.94%).

 

Even gold has lost a lot of its luster. Nonetheless, its average return is nothing to stick your nose up at:  The average year-to-date return of Precious Metals Equity Funds is nothing to stick a nose up at– 77.04%.  That said, it’s wasn’t all that long ago when its average returns were up well over 100%.

 

Make sure to take advantage of the wonderful world of mutual fund performance figures Lipper makes publishes. Use their YTD returns as a guideline for how your individual fund(s) are performing. For instance, Lipper reports the average stock fund is up about 6.79 percent so far this year. Are your stock funds doing •

 

Visit www.allaboutfunds.com for weekly updates to see how various equity and fixed-income funds have rewarded investors over the short-and long-term, based upon Lipper data. Short-term meaning weekly and monthly performance returns; longer-term includes quarterly, year-to-date, 1-yr, 2-yr, 3-yr and 5-yr returns.

 

Lipper’s weekly performance figures for stock and fixed-income funds are at www.allaboutfunds.com in the left column on the home page.

 

• Inflation

Don’t forget…it’s real. Always has been. Always will be. Here’s what I mean:

From Alexander Green, chief investment strategist at The Oxford Club: “Sure, we no longer have the double-digit (inflation) rates of the late ‘70s and early ‘80s. But inflation is still out there – like a slow leak in your pool or termites in an antebellum house – detracting from the value of what you own.”

But here’s the rub from Green’s Investment Wisdom #2906: “Even with the lower rates of the past couple decades, it takes $4,371 today to buy what $2,500 would have bought in 1991.”

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