One of the best end-of-year strategies is the Dogs of the Dow.
You simply buy 10 of the worst performing Dow stocks, which also carry dividends. By year end, you’ll cash out, and then play the next batch of Dogs of the Dow.
In 2023:
Verizon (VZ) – which has a current yield of 7.08% -- fell slightly from about $38 to $37.60
Dow Inc. (DOW) – with a yield of 5.13% -- jumped slightly from $49.99 to $54.59
Intel (INTC) – with a yield of 1.09% -- ran from $26.72 to $46.02
Walgreens (WBA) – with a yield of 7.57% -- fell from about $37 to $25.36
3M (MMM) – with a yield of 5.65% -- fell from about $120 to $106.17
IBM (IBM) – with a yield of 4.1 % -- ran from $140 to $161.89
Amgen (AMGN) – with a yield of 3.23% -- ran from about $258 to $278.96
Cisco (CSCO) – with a yield of 3.11% -- jumped from about $47.48 to $50.16
Chevron (CVX) – with a yield of 4.01% -- fell from about $176 to $150.74
JPMorgan Chase (JPM) – with a yield of 2.52% -- ran from about $134 to $166.71
With dividends included, 2023 was another strong year for the Dogs of the Dow.
The 2022 Dogs of the Dow beat the major indices, even in a tough year. In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. While 2% may not sound like a big win, consider that, in 2022, one of the worst years on record, the Dow Jones lost about 9%.
First let's talk more about the entry. We know the entry will be made above the prior bar's high once our setup is in place. This is the standard entry. There is a circumstance that can occur where we can use an alternate entry, if you have the capability of being with a market in the morning. If you are trading remotely, this may not be a choice. This circumstance occurs when the last bar down is a very wide bar. The problem is that entry over this bar will cause the stop loss to be very far away. It may be far enough away that you no longer desire to take the trade. If this is the case, we can substitute a 30 minute high entry on the current day rather than waiting to trade over the prior day's high. This means that you let the stock trade for 30 minutes, mark off a high of the day at that time, and buy the stock when it trades over that 30 minute high. You will be getting in before the prior days high in this case, so the failure rate will be higher when you opt for this technique. The advantage is that your stop will be much smaller and in some cases, it may be the only option other than passing the trade.
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