Anyone Have or Have Done a “Dogs of the Dow” Portfolio?

[Coronita]

2015 Dogs of the Dow

http://en.wikipedia.org/wiki/Dogs_of_the_Dow

Dogs this year would be

T AT&T 33.59 5.48% Yes
VZ Verizon 46.78 4.70% Yes
CVX Chevron 112.18 3.82% No
MCD McDonald’s 93.70 3.63% No
PFE Pfizer 31.15 3.60% Yes
GE General Electric 25.27 3.48% Yes
MRK Merck 56.79 3.17% No
CAT Caterpillar 91.53 3.06% No
XOM ExxonMobil 92.45 2.99% No
KO Coca-Cola 42.22 2.89% Yes

Thoughts?

[CA renter]

I have, and made some money with it, but that was after the dot.com crash.

Some people seem to do really well with that strategy, or something close to it.

[no_such_reality]

I’ve done it and do it. Primarily to reduce the churn and time investment of watching the stocks across different portfolio. It’s in a retirement account and treated like Ronco Rotesserie chicken. First day of the year, I make about five sells and buys, and then don’t think about it again for year. Last year, that was pretty much a 30% bump. Granted, with a DJIA index fund, it would have been closer to 26%, and a spdr around 14%, I think.

In spite of the changes in the Dow (favoring growth stocks), it’s a strategy that continues to do pretty well. YMMV because the return metrics are based on last day of the year prices and most gap on the first day. It also plays straight to the point Rich was making in his article the other weeks on valuations.

That said, you pick up a portofolio that performs slightly better than the dow on average and provides a nice little dividend.

The metrics are all well published. Here’s one common site: http://www.dogsofthedow.com/dogs2013p.htm

[Coronita]

[quote=no_such_reality]I’ve done it and do it. Primarily to reduce the churn and time investment of watching the stocks across different portfolio. It’s in a retirement account and treated like Ronco Rotesserie chicken. First day of the year, I make about five sells and buys, and then don’t think about it again for year. Last year, that was pretty much a 30% bump. Granted, with a DJIA index fund, it would have been closer to 26%, and a spdr around 14%, I think.

In spite of the changes in the Dow (favoring growth stocks), it’s a strategy that continues to do pretty well. YMMV because the return metrics are based on last day of the year prices and most gap on the first day. It also plays straight to the point Rich was making in his article the other weeks on valuations.

That said, you pick up a portofolio that performs slightly better than the dow on average and provides a nice little dividend.

The metrics are all well published. Here’s one common site: http://www.dogsofthedow.com/dogs2013p.htm%5B/quote%5D

Small dog or normal dog?

Also, are you going to follow this precisely including the oil companies that are there…

[no_such_reality]

All ten. The turnover from last year was I think only three positions Three buys, three sells. Plus and extra one because I chnged up from being off cycle.

My concern is the change in Dow components have left companies like AT&T with their high dividend perpetually on the dogs lists. Then again a 5.6% yield isn’t a bad savings account and I think my yield is more like 6.5% on T which kind of cushions the sucky appreciation they have. Verizon is another one, been in the dogs for a decade stock has been very up and down. Over that decade the stock is up a mere 15%

And yes I bought the oil. I’m a fan of oil. Particular XOM. Oil goes up, they make bank on maintaining margin on an increasing cost item. Oil goes down they make bank on increased consumption. cHV too. And both are increasingly alt energy plays too.

The Saudi shake out will benefit XOM and CHV in the long run. IMHO.

[an]

Based on that list, I think the big oil company have a much higher probability of a much bigger gain, IMHO. I think oil went down up too far too fast.

[poorgradstudent]

I think it’s a decent way to generate value stock ideas and identify sectors that may be undervalued.

I see potential value in Big Oil companies right now. The market tends to swing too hard in both directions with either good or bad news. Oil is not going to stay at $50 a barrel.

KO and MCD face some serious long term challenges. They may have picked most of the low hanging fruit in terms of international growth, and there really is a trend among younger consumers away from junk food.

Merck and Pfizer also face some pretty serious challenges, as the era of the Blockbuster Drug may be over. As someone who works in Biotech, I can tell you the cost of developing new drugs keeps rising while the profits don’t necessarily increase. Any new drug has to be better than existing products. Merck is a better run company than Pfizer; Pfizer has serious problems top to bottom and I wouldn’t want to work there.

I rather like GE and CAT. Not too excited about Telecoms, although they sort of feel like utility stocks at this point; fairly safe, decent dividend. Who is planning to stop using their cell phone entirely this year? Anyone? So the market is pretty stable, even if it’s mature.

[Coronita]

The thing is that I know we have our likes and dislikes. But I’m deciding whether to follow things to the teeth, because I don’t think my intuition is as good as most other people… 🙂

[NicMM]

Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM

[Coronita]

[quote=NicMM]Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM[/quote]

I don’t want to add to that position.

[UCGal]

[quote=flu][quote=NicMM]Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM[/quote]

I don’t want to add to that position.[/quote]

What about any of the total market indexes.
I’m sure it includes dogs and diamonds… since it includes everything.

[Coronita]

[quote=UCGal][quote=flu][quote=NicMM]Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM[/quote]

I don’t want to add to that position.[/quote]

What about any of the total market indexes.
I’m sure it includes dogs and diamonds… since it includes everything.[/quote]

I have VTSAX, which is a vanguard total stock market.

I guess I was just wondering, if given an amount X that you want to allocate it into the stock market, do you distribute it among different benchmarks, or do you just pick 1 like the total stock index and call it a day?

It just seems like there is a variability in each of the benchmarks, but is it worth being in all of them…Or if you do that over a long period of time, it ends up being noise and no difference than just picking a “total stock market index”?

[UCGal]

[quote=flu][quote=UCGal][quote=flu][quote=NicMM]Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM[/quote]

I don’t want to add to that position.[/quote]

What about any of the total market indexes.
I’m sure it includes dogs and diamonds… since it includes everything.[/quote]

I have VTSAX, which is a vanguard total stock market.

I guess I was just wondering, if given an amount X that you want to allocate it into the stock market, do you distribute it among different benchmarks, or do you just pick 1 like the total stock index and call it a day?

It just seems like there is a variability in each of the benchmarks, but is it worth being in all of them…Or if you do that over a long period of time, it ends up being noise and no difference than just picking a “total stock market index”?[/quote]

Personally – I keep it simple.
Total stock index fund.
total bond index fund
Some leftover TIPS index fund
and a small int’l equity index fund.

The common thread is index funds. My total in the stock/equity side is 60%. My total in the bond side is 40%. That way on days the market takes a dump, my bonds either go up , or go down LESS… Kind of adding hysteresis to the market fluctuation. I don’t try to time anything or go to heavily into any sub group (energy, tech, whatever…) I just keep it simple.

I lost a lot of money when I was buying individual stocks and trying to time the market. I’m not smart enough for that.

[Coronita]

[quote=UCGal][quote=flu][quote=UCGal][quote=flu][quote=NicMM]Why don’t we just buy BKR-B? Isn’t it simpler than tracking Dow and adjusting portfolio very year?

NicMM[/quote]

I don’t want to add to that position.[/quote]

What about any of the total market indexes.
I’m sure it includes dogs and diamonds… since it includes everything.[/quote]

I have VTSAX, which is a vanguard total stock market.

I guess I was just wondering, if given an amount X that you want to allocate it into the stock market, do you distribute it among different benchmarks, or do you just pick 1 like the total stock index and call it a day?

It just seems like there is a variability in each of the benchmarks, but is it worth being in all of them…Or if you do that over a long period of time, it ends up being noise and no difference than just picking a “total stock market index”?[/quote]

Personally – I keep it simple.
Total stock index fund.
total bond index fund
Some leftover TIPS index fund
and a small int’l equity index fund.

The common thread is index funds. My total in the stock/equity side is 60%. My total in the bond side is 40%. That way on days the market takes a dump, my bonds either go up , or go down LESS… Kind of adding hysteresis to the market fluctuation. I don’t try to time anything or go to heavily into any sub group (energy, tech, whatever…) I just keep it simple.

I lost a lot of money when I was buying individual stocks and trying to time the market. I’m not smart enough for that.[/quote]

What bond(s) or bond fund(s) do you have?

[UCGal]

SWLBX (Schwab total bond fund)
SWRSX (Schwab TIPS bond fund)

Disclaimer – no idea if these are the best bond funds – but they fit my plan for a 60% equity/40% fixed income asset allocation that I could set and forget.

I know a lot of people just go simple and use Vanguard Wellington or Wellesley active (but low expense) funds. But I’m at Schwab – so tried to use Schwab funds.

[Author]

Posts