Below is a chart of the performance of the Dogs of the Dow from December 31, 2019 to December 31, 2020.
As with 2019, the Dogs of the Dow (ten high yield stocks) failed to exceed the performance of the Dow Jones Industrial Average in 2020. In addition, the Dogs of the Dow (ten high yield stocks) severely underperformed the low yield stocks with a spread of 32 points.
Our commentary from the January 2020 Dogs of the Dow watch list had the following to say:
“…high price to book, high price to earnings, and low dividend yield are the categories that we like the most for outperformance...”
Overall, the performance of the respective categories achieved the stated objective. High price to earnings faltered with only the (2nd, 3rd, & 4th) grouping managing to match the DJIA.
High yield stocks not only underperformed they also led the charge lower. If the DJIA index managers are done with changes to the index, we should see the high yield stocks match or exceed the index as years of exceptional gain must come to an end and the stocks that have already been punished should outperform solely by virtue of not declining as much.
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