Every January, one of the best strategies is to invest in the top Dogs of the Dow.
In 2021, the Dogs of the Dow returned about 16.3%.
While 2020 wasn’t a great year for the Dogs, most other years have done very well. In 2019, the Dogs were up 20%. In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%. In 2017, the dogs were up 19%. In 2016, they were up 16%.
And while many of the 2022 Dogs of the Dow are down at the moment, many are oversold, with strong dividend yields to boot.
- Verizon (VZ) started the year at $50.83, and is now oversold at $44.76 with a yield 5.72%
- Dow Inc. (DOW) started at $55.93 and is now oversold at $54.30, with a yield of 5.16%
- IBM (IBM) started at $130.89 and is now up to $131.05, with a yield of 5.03%
- Chevron (CVX) ran from $115.25 to $155.25, and has a yield of 3.66%
- Walgreens (WBA) fell from $51.14 to $39.76, and has a yield of 4.83%
- Merck (MRK) ran from $75.29 to $88.75, and has a yield of 3.11%
- 3M (MMM) fell from $174.85 to $149.13, and has a yield of 3.99%
- Amgen (AMGN) ran from $219.96 to $250.49, and has a yield of 3.10%
- Coca-Cola (KO) ran from $57.95 to $63.46, and has a yield of 2.77%
- Intel (INTC) fell from $50.86 to $35.10, and has a yield of 4.16%
These oversold dividend stocks could allow investors to profit in two ways: One, through potential appreciation of the stock price from depressed levels. Two, through dividend distributions.
Another way to trade the Dogs of the Dow strategy is with an ETF such as the ALPS Sector Dividend Dogs ETF (SDOG), which carries a dividend yield of 4.02%. At the moment, it’s also oversold, but is starting to quickly pivot higher.
As noted by ALPS Funds:
“The ALPS Sector Dividend Dogs ETF (SDOG) applies the ‘Dogs of the Dow Theory’ on a sector-by-sector basis using the S&P 500 Index as its starting universe of eligible securities. SDOG provides high dividend exposure across 10 sectors of the market by selecting the five highest yielding securities in each sector and equally weighting them.”