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Originally Posted by freeier who are the dogs ? |
Changes some every year but it is the highest dividend paying companies in the Dow Jones Industrial Average. The Dogs of the Dow Theory is really quite simple. The Dow Jones Industrials is a prestigious list of companies to begin with. By sorting these stocks to find the ten companies with the highest dividend yield, you are automatically choosing companies that are undervalued relative to their peers. By refreshing the list each year, you're always picking new "dogs" - the ones that stand the greatest chance of catching up with their peers.
You have to understand what causes companies to pay higher dividends in order for this to make sense to you. Another part of the logic is reinvesting the dividends allows you to cushion your fall if the stock falls and you end with more shares when the company rebounds, most of whom do.
Here are the 2006 Dogs.
Stock Symbol Company Name 2005 Close Dividend Yield
GM General Motors $19.42 10.5%
VZ Verizon Communications $30.12 5.4%
MRK Merck and Co. $31.81 4.7%
MO Altria Group $74.72 4.3%
PFE Pfizer Inc. $23.32 4.1%
C Citigroup $48.53 3.6%
JPM JP Morgan Chase $39.69 3.4%
DD DuPont $42.50 3.4%
KO Coca-Cola $40.31 2.8%
GE General Electric $35.05 2.8%
I first read about this in a book by Jeremy Siegel and for some reason I can't remember the name of it right now. The annual return over the last 20 years has been 17% as opposed to 11% for the rest of the dow.
Anyway, just wondering if anyone here is doing it.
