The New Dow Strategy in 1996-97 by Paul and Carole Huebotter
The Dow dividend strategy - or, more idiomatically, the "dogs of the Dow" - has garnered a lot of attention lately. It, or one of its variations, has been the subject of at least five full-length books in the 1990s as well as countless articles. An August 1996 Stocks & Commodities article covered just this subject and included a theoretical explanation for the success of the Dow dividend strategy and its progeny. Here's an update.
Life is not always kind. When we compiled the 1996 record of the new Dow strategy, we knew that another year like any of the last five would be too much to hope for. In those years, our system outperformed more than 95% of all mutual funds each year. From 1991 through 1995, a $10,000 investment based on the formula of the new Dow strategy grew to $35,203. Over this five-year period, the system outperformed both the Dow Jones Industrial Average (DJIA) and the traditional 10-stock version of the Dow dividend strategy each year.