NEW YORK ( Stockpickr) -- Roughly 20 years ago, investors started focusing on the " Dogs of the Dow ." These are the 10 highest-yielding stocks in the Dow Jones Industrial Average, and their above-average yield is often a sign of recent distress for the company involved. In theory, these high-yielders have been oversold (as the share price falls, the dividend yield goes up) and are most likely to outperform the rest of the Dow stocks in the next 12 months.A clear pattern is emerging. The Dogs of the Dow outperformed the market in the first half of the 1990s and the first half of the last decade as well. Yet it underperformed in the second half of each decade. As we move through a fresh decade, that trend is intact. >>7 Dividend Stocks Shoveling Cash to Shareholders The Dogs of the Dow have returned about 10% thus far in 2011 (as measured by the 10 Dow stocks that offered the highest yield at the end of 2010), compared with flat results for the broader DJIA. McDonald's ( MCD), Intel ( INTC) and Pfizer ( PFE) have led the way, with each rising more than 15% thus far in 2011. The outperformance is understandable. The Dogs of the Dow tends to do well when investors are defensive. So if 2012 brings another year of investor uncertainty, the current crop of Dogs may lead the market once again in 2012.
2012 Stock Predictions and Outlook
|Your one-stop shop for 2012 stock recommendations and market predictions. |
The Best Stock for a Parched State
A High-Tech Yielder
Safety Plus Growth
Twitter and become a fan on Facebook.