The 10 'Dogs of the Dow' for 2009 - Top Stocks Blog - MSN Money
 
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The 10 'Dogs of the Dow' for 2009

Posted Dec 31 2008, 09:00 AM by Andrew Horowitz
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If you have not had the opportunity to work with the MSN Money Stock Screener, you should. It provides for a great ways to find investment ideas that could, after some research, turn up winners. The first component of the research process for The Disciplined Investor's QuantaFundaTechna approach uses screens to focus on purely quantitative measures to find stocks that meet a variety of conditions.

A simple example of a screen that has been relatively successful over time is known as The Dogs of the Dow. The group of 10 stocks is now set for 2009. Here is the list:

According to the MSN Money Screener tool:

This simple search identifies the top Dow Dividend stocks. This is the first step in a strategy commonly known as the "Dogs of the Dow." It suggests buying the ten Dow Jones Industrials with the highest dividend yield - the top companies in the result set from this search -- and then reallocating the portfolio every year based on a new ordering of the stocks.  There are several variations of this approach.  One suggests buying the cheapest five of the 10 Dow Dogs.  Another, made popular by the Motley Fool, thins the list to four - and is known as the "Foolish Four."  The various "Dogs of the Dow" approaches are no dogs in the return department, however, with annualized gains over a quarter century ranging from more than 17% to more than 20%.

From highest yield to lowest, the 10 Dogs of the Dow for 2009:

  1. Bank of America Corp
  2. Citigroup Inc
  3. General Electric Co
  4. Pfizer Inc
  5. Alcoa Inc
  6. E I du Pont de Nemours and Co
  7. AT&T Inc
  8. Verizon Communications Inc
  9. Merck & Co Inc
  10. JPMorgan Chase & Co

Dogs of the Dow 2009

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Andrew Horowitz is a money manager and the founder of Horowitz & Company. He is also the author of the bestselling book, The Disciplined Investor . Check out his latest investment idea or listen in as he hosts, The Disciplined Investor Podcast.

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Comments

 

This list bothers me.  A lot.  I've been following it for the last month or so as I've been considering buying these and writing covered calls against them.

However, I thought I remembered something about the Citi bailout limiting their dividends to $0.01.  Is that correct?  If so, I think that Citi should not actually be on the list.  How badly would that skew the results?

Joseph (Posted 12.31.08 5:14 PM) Report Abuse

Best or worst of the stocks?  Ask me this time next year and I'll give you a very precise list of the best stocks to buy for 2009.  Until then, it's all a guess.

Greg (Posted 12.31.08 6:47 PM) Report Abuse

Citigroup doesn't have a dividend anymore. It should be replaced with Kraft(K).

Michael (Posted 01.01.09 2:58 AM) Report Abuse

An important issue here is - how safe are these dividends?  I would be very nervious about the safety of the dividends on any financial company during this recession!

On the other hand, the Telecoms could be a good Obama play.

--joe

SnoopyJC (Posted 01.01.09 2:29 PM) Report Abuse

Odds are quite high that the DOW losers will continue to struggle in 2009 because they have suffered a massive decline in business.  In prior years, the companies could recover quickly from an economic slowdown.  Not so this time around.  So what stocks do we pick ?

The world´s most successful investor, Warren Buffett, succeeds because he is a contrarian.  When the average Joe and Jane are selling, he is buying.  When the average Joe and Jane is buying, he is selling.  He is selectively buying value stocks right now.  Any company that is currently trading far below its liquidation value is a great candidate for an investment.  These value stocks are rare, but they are out there.  Smart investors like Buffett are slowly accumulating these future winners right now.  While even the wealthy investors are sitting on the sidelines hoping for the market to settle down, Buffett is buying positions in companies that are already trading at a price far below liquidation value.  If they end up going down more, he buys more.  More info on value stocks at http://www.ValueStockTips.com

Grant (Posted 01.01.09 3:38 PM) Report Abuse

Of all these I like Merck the best. Stable. Cash cow products. GE is 2nd simply due to its diversified business units. Any financial company is a crap shoot. They will likely all lower their dividend to $0.01.

rob (Posted 01.02.09 9:19 AM) Report Abuse

yes just shows how good australia is for investment because thats what we do in australia invest not over indulge the markiet with endless streams of shops that are not makiing money or components that have a shelve life of 5 years before costing the manufacturing company endless supply of money for redesign to enable it to fit the market we design for the future needs and todays necessary profits.hows that for a country which fails to fall into deep recession every time the world goes ever down we have our economy in the right and correct mixture but i am concerned about the deregulation that is not being checked we may need free market but we do not need free market fall due to greedy utility companies

chris compaan (Posted 01.02.09 5:59 PM) Report Abuse

Citigroup doesn't have a dividend anymore. It should be replaced with Kraft(K).

yes it does it paid me on 11/26/2008

John Holmes (Posted 01.04.09 7:12 PM) Report Abuse

When household names like this are falling apart, I pause and wonder why anyone would trust any news from anyone on Wall Street.

Dave (Posted 01.16.09 3:50 PM) Report Abuse

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