The Dogs of the Dow Retrieve Returns for Owners

Wall St. Cheat Sheet

There are countless strategies to employ when investing in stocks.  One of the easiest and most well-known strategies is called the Dogs of the Dow.  The strategy requires investors to buy an equal amount of the ten highest yielding stocks found in the Dow Jones Industrial Average at the beginning of the year.  The ten stocks are then replaced at the beginning of the next year with the new highest yielding stocks in the Dow.

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It can be difficult for some investors to stomach this strategy, because investors are only paying attention to dividend yields, as opposed to many other fundamental factors.  However, this strategy has paid off well in 2011.  Excluding dividends, the ten Dogs of the Dow for 2011 have gained an average of 12.5 percent year-to-date.  The only Dog to post a decline for the year is DuPont .  In comparison, the entire Dow is only up 6 percent for the year, while the S&P 500 is flat.

The ten Dogs for 2011 are listed below:

AT&T
Verizon Communications
Pfizer Inc.
Merck & Co. Inc.
Kraft Foods Inc.
Johnson & Johnson
Intel Corp.
DuPont
McDonald’s Corp.
Chevron Corp.

Investors employing the Dog strategy for 2011 missed large gains in Dow components such as Home Depot and IBM , but also avoided the biggest Dow losers such as Bank of America , Alcoa Inc. and Hewlett Packard .  With 2011 coming to a close, investors are now preparing for 2012.

The ten Dogs for 2012, as of December 28:

AT&T
Verizon Communications
Merck & Co. Inc.
General Electric
Pfizer Inc.
DuPont
Johnson & Johnson
Intel
Procter & Gamble
Kraft Foods Inc.

As the list above shows, General Electric and Procter & Gamble would replace McDonald’s and Chevron for 2012.

Here’s how the Dogs of the Dow are trading in the final day of 2011 market action:

AT&T, Inc. : T shares recently traded at $30.18, up $0.01, or 0.03%. They have traded in a 52-week range of $27.20 to $31.94. Volume today was 978,351 shares versus a 3-month average volume of 24,971,100 shares. The company’s trailing P/E is 15.31, while trailing earnings are $1.97 per share.

Verizon Communications Inc. : VZ shares recently traded at $39.89, down $0.16, or 0.4%. They have traded in a 52-week range of $32.28 to $40.08. Volume today was 795,261 shares versus a 3-month average volume of 14,089,900 shares. The company’s trailing P/E is 16.04, while trailing earnings are $2.49 per share.

Pfizer Inc. : PFE shares recently traded at $21.77, up $0.06, or 0.28%. They have traded in a 52-week range of $16.63 to $21.90. Volume today was 2,189,530 shares versus a 3-month average volume of 45,834,900 shares. The company’s trailing P/E is 15.12, while trailing earnings are $1.44 per share.

Merck & Co. Inc. : MRK shares recently traded at $37.74, up $0.01, or 0.03%. They have traded in a 52-week range of $29.47 to $37.90. Volume today was 575,283 shares versus a 3-month average volume of 17,263,700 shares. The company’s trailing P/E is 27.59, while trailing earnings are $1.37 per share.

Kraft Foods Inc. : KFT shares recently traded at $37.51, down $0.17, or 0.45%. They have traded in a 52-week range of $30.21 to $37.93. Volume today was 495,857 shares versus a 3-month average volume of 8,686,980 shares. The company’s trailing P/E is 20.46, while trailing earnings are $1.83 per share.

Johnson & Johnson : JNJ shares recently traded at $65.61, down $0.27, or 0.41%. They have traded in a 52-week range of $57.50 to $68.05. Volume today was 471,510 shares versus a 3-month average volume of 11,244,200 shares. The company’s trailing P/E is 16.01, while trailing earnings are $4.10 per share.

Intel Corporation : INTC shares recently traded at $24.53, down $0.02, or 0.08%. They have traded in a 52-week range of $19.16 to $25.78. Volume today was 1,343,639 shares versus a 3-month average volume of 58,589,900 shares. The company’s trailing P/E is 10.62, while trailing earnings are $2.31 per share.

EI DuPont de Nemours & Co. : DD shares recently traded at $45.62, down $0.23, or 0.5%. They have traded in a 52-week range of $37.10 to $57.00. Volume today was 479,393 shares versus a 3-month average volume of 7,381,120 shares. The company’s trailing P/E is 12.39, while trailing earnings are $3.68 per share.

McDonald’s Corp. : MCD shares recently traded at $100.32, down $0.49, or 0.49%. They have traded in a 52-week range of $72.14 to $101.00. Volume today was 288,481 shares versus a 3-month average volume of 5,782,410 shares. The company’s trailing P/E is 19.68, while trailing earnings are $5.10 per share.

Chevron Corp. : CVX shares recently traded at $107.28, down $0.19, or 0.18%. They have traded in a 52-week range of $86.68 to $110.01. Volume today was 359,414 shares versus a 3-month average volume of 9,515,420 shares. The company’s trailing P/E is 7.95, while trailing earnings are $13.50 per share.

To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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