What Will Be the Top Dog in 2013? - Real Time Insight
January 03 2013 - 8:43AM
Zacks
One investing strategy that you never hear that much about
anymore is the ‘Dogs of the Dow’ technique. This approach takes the
ten highest yielding DJIA stocks at the close of the year’s last
trading day, and equally invests in each of them for the following
year.
In addition to being a great strategy for obtaining a high level
of income, the method looks to invest in industries that are at the
bottom of their business cycle. Generally when this happens,
dividend yields are higher than what investors see in other corners
of the market (due to depressed stock prices), hence the focus on
yield as opposed to PEs or similar value metrics.
Performance has been middle of the road for the strategy, as it
has generally outperformed the broad DJIA and even the S&P 500,
but its performance in bear markets and immediately following the
recession has been questionable. This has left many to wonder how
relevant the Dogs of the Dow are in this type of market
environment, but for those curious we have 2013’s list below:
Symbol
|
Yield (on 12/31)
|
T
|
5.3%
|
VZ
|
4.8%
|
INTC
|
4.4%
|
MRK
|
4.2%
|
PFE
|
3.8%
|
DD
|
3.8%
|
HPQ
|
3.7%
|
GE
|
3.6%
|
MCD
|
3.5%
|
JNJ
|
3.5%
|
While there are some usual suspects on this list—like the
telecoms and big pharma companies—there is a bit of turnover from
previous years as well. Furthermore, investors should note that of
the ten, all currently have a Zacks Rank of 3 or ‘Hold’ except for
GE which has a Zacks Rank of 4 or ‘Sell’.
What do you think of this year’s list? Will you be investing in
this year’s versions of the Dogs of the Dow?
Or if you prefer, which of the above do you think will be 2013’s
‘top dog’ (best performer) from the group? Personally, I like DD.
Oil prices have been moderate which should help chemical
manufacturers like DuPont, while the stock appears to be cycling
off of its lows as well.
If that wasn’t enough, the stock has a very favorable Earnings
ESP of 10%, suggesting that it could start the year with an
earnings beat when it reports in a few weeks time…
What about you? What do you think will be this year’s top
dog?
Let us know in the comments below!
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