Mutual Funds Clone the Dogs of the Dow

The sidewalks are sizzling. The subways are steamy. The market is wilting. The dog days of summer are once again upon us. Time to see how the dogs of the Dow, and their mutual fund masters, are handling the heat.

For those unfamiliar with the concept, the dogs of the Dow are not members of an index tracking pet stocks but rather an investment strategy that advocates buying the 10 Dow Jones Industrial Average stocks with the highest dividend yields. Adherents to the dogs' philosophy believe these beaten-down stocks -- remember, yield moves inversely to price -- are undervalued and due to rally.

Typically, dog investors readjust their portfolios at the beginning of each calendar year. The daily progress of the dogs can be tracked on Web sites such as DogsoftheDow.com. The 2004 list includes Altria(MO Quote), SBC Communications(SBC Quote), General Motors(GM Quote), J.P. Morgan Chase(JPM Quote), Merck(MRK Quote), DuPont(DD Quote), Citigroup(C Quote), Verizon(VZ Quote), General Electric(GE Quote) and Pfizer(PFE Quote). ...