It turned out to be a poor year for the Dow Jones Industrial Average, with the index remaining relatively flat by late December. As we've done for the past thirteen years, the close of one year signals the time to announce the Dogs of the Dow for 2019.
After experiencing a double-digit gain last year, the Dogs of the Dow ended 2018 with a 0.02% gain. They outperformed the Dow Jones Industrial Average (DJIA) by a small relatively small margin. The dogs also outpaced the S&P 500 Index, beat this benchmark for the third consecutive year.
IIn 2018, the S&P 500 finished the year with a 4.6% loss, the DJIA closed out the year with a loss of 3.7%, while the Dogs managed to stay in positive territory with a 0.02% gain. Overall, the Dogs of the Dow Theory proved to be a winning investment strategy only four times in the last ten years (2010, 2011, 2016, and 2018).
Some of the bigger Dogs in 2018 include General Electric (-55.4%), International Business Machines (-22.5%), and ExxonMobil (-15.1%) which are poor results for blue chip stocks. These same three stocks were also the biggest dogs in 2017.
It's only possible to announce the Dogs of the Dow after the last trading day of any given year. Fortunately, the criteria for choosing these new Dogs are simple:
The companies that make up the 2019 Dogs of the Dow can be found in the following table:
|Stock Symbol||Company Name||2018 Close||Dividend Yield|
|IBM||International Business Machines||113.67||5.52%|
|JPM||JP Morgan Chase||97.62||3.28%|
|PG||Procter & Gamble||91.92||3.12%|
This year's list contains only one new company. General Electric, which was also removed from the DJIA in 2018 was replaced by JP Morgan Chase.
The Dogs of the Dow Theory was first popularized by Michael O'Higgins in his book Beating the Dow, published back in 1992. Anyone interested in learning more about the assumptions behind this investing strategy, should read our complete article on Dogs of the Dow. That article explains more of the history behind this approach, including the steps to follow when investing in each of these companies. It also contains a list of the Dogs of the Dow for the last five years, as well as their historical performance over an eighteen-year timeframe.
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