Passive-income seekers see the start of a given year as an opportunity to participate in the “Dogs of the Dow” strategy. What’s that investment method? Well, investors buy the 10 highest-yielding stocks from the Dow Jones Index — say at the start of 2022 — and hold them for 12 months. Then, in 2023, they invest in the next set of 10 highest-yielding stocks and rebalance their portfolios.
Recent research reveals “mixed findings” on the validity of this process. The Dogs have indeed trailed the index in each of the past four years, primarily reflecting investor appetite for high-growth stocks during that period. Yet, as value stocks begin to regain their momentum, 2022 may finally be the year for the Dogs of the Dow.
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