It turned out to be a pretty good year for the Dow Jones Industrial Average, with the index rising nearly 10%. As we've done for the past fourteen years, the close of one year signals the time to announce the Dogs of the Dow for 2021.
Dogs of the Dow Performance
After experiencing a double-digit gain last year, the Dogs of the Dow ended 2020 with a 12.6% loss. Unfortunately, they underperformed both the Dow Jones Industrial Average (DJIA) as well as the S&P 500 Index.
In 2020, the S&P 500 finished the year with a 18.4% gain, the DJIA closed out the year with a gain of 7.2%, while the Dogs managed a double-digit loss, they were clearly outpaced by both indexes. Overall, the Dogs of the Dow Theory proved to be a winning investment strategy only three times in the last ten years (2011, 2016, and 2018).
Some of the bigger Dogs in 2020 include ExxonMobil (-54.8%), Walgreens (-32.4%), Chevron (-29.9%), and IBM (-6.1%) which are poor results for blue chip stocks given the overall market performance.
2021 Dogs of the Dow
It's only possible to announce the Dogs of the Dow after the last trading day of any given year. Fortunately, the criteria for choosing these new Dogs are simple:
The companies must be members of the Dow Jones Industrial Average, which has 30 member companies that are all blue chip stocks.
The Dogs of the Dow consist of the ten companies with the highest stock dividend yield on the last day of trading in a calendar year.
The companies that make up the 2021 Dogs of the Dow appear in the following table:
Dogs of the Dow 2021
Stock Symbol | Company Name | 2020 Close | Dividend Yield |
CVX | Chevron | 84.45 | 6.11% |
IBM | IBM | 125.88 | 5.18% |
DOW | Dow | 55.5 | 5.05% |
WBA | Walgreens | 39.88 | 4.69% |
VZ | Verizon | 58.75 | 4.27% |
MMM | 3M | 174.79 | 3.36% |
CSCO | Cisco | 44.39 | 3.24% |
MRK | Merck | 81.8 | 3.18% |
AMGN | Amgen | 229.92 | 3.06% |
KO | Coca-Cola | 54.84 | 2.99% |
Eight of the ten companies in this list - IBM, ExxonMobil, Verizon, Chevron, Cisco Systems, Walgreens, 3M and Coca-Cola were also dogs in 2020.
Dow Theories
The Dogs of the Dow Theory was first popularized by Michael O'Higgins in his book Beating the Dow, published back in 1992. Anyone interested in learning more about the assumptions behind this investing strategy, should read our complete article on Dogs of the Dow. That article explains more of the history behind this approach, including the steps to follow when investing in each of these companies. It also contains a list of the Dogs of the Dow for the last five years, as well as their historical performance over an nineteen-year timeframe.
Additional Resources
When investors talk about quality stocks, they'll often use the phrase "blue chip." Unfortunately, even seasoned market analysts can't agree on a definition of this term. But they do agree that blue chip stocks have some very desirable attributes.
Moneyzine EditorNovember 6th, 2024
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