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How the Dogs of the Dow Fared in 2016

2016 was a solid year for the Dow Jones Industrial Average (DJINDICES:^DJI), with the popular market average rising 13% during the year. Yet one dividend strategy that many investors use, known as the Dogs of the Dow, came into the year with a solid track record of five years of outperformance over the past six. Let's look more closely at the Dogs of the Dow and how they did compared to the Dow Jones Industrials in 2016.

Image source: Getty Images.

What makes the Dogs of the Dow strategy so attractive?

Two things stand out about the Dogs of the Dow strategy: it's easy to use, and it has performed well. The way you pick the Dogs is very simple. When the year starts, look at the top 10 yielding dividend stocks in the Dow Jones Industrials. Invest equal amounts of money in all 10 stocks. Then, hold onto those stocks throughout the year. At the end of the year, dividend yields will have changed, and so following the strategy for another year will inevitably require you to sell some of your holdings and buy new ones.

The secret behind the success of the Dogs of the Dow is...


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