We’re two months into 2016, and one of the key trends so far this year has been the outperformance of value stocks over growth stocks. Higher dividend paying stocks in general have outperformed low or no dividend paying stocks, and that has certainly shown in the performance of 2016’s Dogs of the Dow members.
If you’re unfamiliar with the Dogs of the Dow strategy, it’s a very passive, hands-off investment approach that says to simply buy the ten highest yielding Dow stocks at the start of each year. Below is a table showing the year-to-date performance of this year’s Dogs of the Dow plus the twenty non-Dogs. As shown, the average change of the ten Dogs is actually in positive territory at +0.17%, so if you owned this strategy, you’d be outperforming the market by quite a bit already. The twenty Dow members that aren’t Dogs for 2016 are down an average of 6.17% year-to-date, with Boeing (BA), Intel (INTC), JP Morgan (JPM), American Express (AXP) and Goldman Sachs (GS) all down 10%+. Pfizer (PFE) is the worst performing Dog with a YTD decline of just 7%.
A couple of other things to note. CVX is now the highest yielding stock in the Dow at 5.07%. Cisco (CSCO) has seen its yield jump from 3.09% at the start of the year to 3.92% now after it raised its quarterly payout by 5 cents/share earlier this month. It now yields the same amount as IBM. Finally, if we were to re-shuffle the Dow at this point, Wal-Mart (WMT) and Procter (PG) would come out of the Dogs and Boeing (BA) and Intel (INTC) would be added. But the re-balance only occurs at the start of each year, and these numbers will continue to shift all year.