The average stock in the Dow Jones Industrial Average is down 16.24% on a total return basis so far in 2020. Below we take a look at how the “Dogs of the Dow” strategy has performed so far this year.
The “Dogs of the Dow” strategy is a very passive approach that simply says to buy the 10 stocks in the Dow 30 that have the highest dividend yields at the start of each year. The Dogs list for 2020 was led by Dow Inc. (DOW) with a yield of 5.12% on January 1st. Exxon Mobil (XOM), IBM, Verizon (VZ), Chevron (CVX), Pfizer (PFE), 3M (MMM), Walgreens (WBA), Cisco (CSCO), and Coca-Cola (KO) are the nine other members of the Dogs for 2020.
As shown in the table below, the Dogs are down an average of 19.37% on a total return basis in 2020, which is a little less than five percentage points worse than the 14.68% decline seen for the 20 non-Dogs this year. Dow Inc. (DOW) and Exxon Mobil (XOM) have been the two worst performing Dogs with respective YTD declines of 39.9% and 37.0%. Dow’s dividend yield has risen from 5.12% up to 8.47%, while XOM’s yield has risen from 4.99% up to 7.91%. There are no Dogs that are up on the year, but Verizon (VZ) and Pfizer (PFE) have been the best performers of the group with YTD declines of less than 5%.
Of the non-Dogs, Boeing (BA) has been by far the worst performer with a YTD decline of 60.01%. At the start of 2020, BA had a dividend yield of 2.52%, but that dividend has been suspended. JP Morgan (JPM), American Express (AXP) and Disney (DIS) have all fallen more than 30% YTD, while Johnson & Johnson (JNJ), Walmart (WMT), and Microsoft (MSFT) are the only three Dow stocks that are up on the year. Read our weekly Bespoke Report newsletter released every Friday with a two-week free trial to Bespoke Premium.