Dogs of the Dow update

The Dogs of the Dow is one of the simplest strategies to beat the market. In 2013, it beat the Dow Jones Industrial Average (DJINDICES: ^DJI  ) by 8.4% for a total return of 35% according to Motley Fool where I found this information. Dogs of the Dow is an investing strategy that buys and holds equal dollar amounts of the 10 highest-yielding dividend stocks of the Dow Jones Industrial Average. The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycles and should do much better going forward. Investors in the strategy would then get not only large dividends, but also gains in the stocks underlying those dividends.

I find this an interesting strategy.  Ironically one of our largest positions at the moment is AT&T, the highest yielding dog on the Dow.  It’s down 1.3% YTD but we recently just purchased the stock so we are oscillating between profits and losses on the position.  What drove our attention to it is that it is one of the few blue chip stocks with massive insider buying.  Director Matthew Rose purchased 30,000 shares at $34.65 on 8-7-14 increasing his stake by 69.8%.  Director Glenn Hutchins bought a massive $3.6 million worth of the wireless giant on 7-25-14 and another director Scott Ford purchased 10,000 shares at $35.59 on 7-28-14.  They must know something that the investing public doesn’t know.  With a 5.31% dividend yield you can get paid to wait and find out.

 Dogs of the Dow YTD