Dogs of the Dow Investment Strategy: Does It Work or Not?

By Fredrik Arnold:Up until this week, your intrepid Dogs of the Index strategist has applied dog dividend methodology only to lists of stocks created for a publisher's stated purpose.For example:CME Group states:

StreetAuthority submits: By David StermanThe coming year marks the 20th anniversary of the first use of "Dogs of the Dow" as an investment strategy, which focuses on the 10 highest-yielding stocks in the Dow Jones Industrial Average (DJIA).

Jim Pyke submits:Dogs of the Dow (DoD) Theory postulates that one can buy the highest dividend yielding stocks in the Dow Jones Industrial Average (DIA) and outperform the Dow over the following year. The theory is based on the notion that the highest yielding dividend stocks will be bid up as investors seek the higher dividends until the yields drop to a more reasonable range.

By Douglas Albo: It has been a fantastic year for the US markets and no where is that better reflected than in the stodgy, old Dow Jones Industrial Average (DJIA). The DJIA as measured by the SPDR Dow Jones Industrial Average ETF (DIA) which includes dividends, is up 13.1% YTD on a total return basis, exceeding that of the S&P 500 and the NASDAQ so far for 2013.

Hickey and Walters (Bespoke) submit: The "Dogs of the Dow" strategy is one of the simplest investment practices around. At the start of the year, investors simply buy an equal-weighted basket of the ten highest yielding stocks in the Dow Jones Industrial Average.

David Alton Clark submits:

Fredrik Arnold submits:Over the years, many investment strategists have recommended dividend paying stocks. How do you know which dividend stock is good, better, best, bad or ugly? One way is to back test using historic pricing and dividends. Here is a five year back test for one of the longest running dividend stock picking systems.

Jim Pyke submits:The Dow Jones Industrial Average (DJIA) is one of the leading stock market indicators in the world. The DJIA is the subject of several investing strategies, including the Dogs of the Dow which basically states that a portfolio of the top 10 dividend yielding stocks will outperform the DJIA over the next year. However, the 2011 DOD is currently underperforming.