It has been asked what the total return for the respective Dogs of the Dow (high yield stocks) would be compared to the top Low Yield stocks, that we favor, if they were compounded over time.
In this series, we’ll identify the total return of the portfolio, as best we can, based on the Dogs of the Dow strategy as outlined in Michael O’Higgins book Beating the Dow. This strategy requires that the portfolio is switched out each year with a new set of ten high yielding stocks from the Dow Jones Industrial Average.
Additionally, we will list the total return, within the limits of the available data, of the high yield and low yield stocks when ranked in the highest and lowest selecting the top ten in each list.
Because our earliest list is 1991, we posting the total returns of the stocks from December 31, 1990 to the intraday price as of December 7, 2020.
As we have observed in the past, it becomes very challenging to generate total returns for High Yield stocks as part of the Dogs of the Dow strategy simply because so many of them go bankrupt. Notice that in the Low Yield group, only one of the ten stocks goes bankrupt (Bethlehem Steel) while four companies in the High Yield group (Sears, Westinghouse, Eastman Kodak, General Motors) filed bankruptcy.
See Also:
1991 Dogs of the Dow: One Year Returns
Notes:
*Union Carbide bought by Dow Chemical (DD)
*AlliedSignal bought Honeywell (HON) and assumed Honeywell’s name and potentially their share data.
*Texaco was bought by Chevron (CVX)