It turned out to be a pretty good year for the Dow Jones Industrial Average, with the index rising nearly 10%. As we've done for the past fourteen years, the close of one year signals the time to announce the Dogs of the Dow for 2021.
After experiencing a double-digit gain last year, the Dogs of the Dow ended 2020 with a 12.6% loss. Unfortunately, they underperformed both the Dow Jones Industrial Average (DJIA) as well as the S&P 500 Index.
In 2020, the S&P 500 finished the year with a 18.4% gain, the DJIA closed out the year with a gain of 7.2%, while the Dogs managed a double-digit loss, they were clearly outpaced by both indexes. Overall, the Dogs of the Dow Theory proved to be a winning investment strategy only three times in the last ten years (2011, 2016, and 2018).
Some of the bigger Dogs in 2020 include ExxonMobil (-54.8%), Walgreens (-32.4%), Chevron (-29.9%), and IBM (-6.1%) which are poor results for blue chip stocks given the overall market performance.
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 2021 Dogs of the Dow appear in the following table:
|Stock Symbol||Company Name||2020 Close||Dividend Yield|
Eight of the ten companies in this list - IBM, ExxonMobil, Verizon, Chevron, Cisco Systems, Walgreens, 3M and Coca-Cola were also dogs in 2020.
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 nineteen-year timeframe.
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