In the early ’90s, Michael B. O’Higgins popularized a strategy called the “Dogs of the Dow.”

That’s where investors purchase the 10 stocks in the Dow Jones Industrial Average with the highest yield.

The idea is that these stocks have higher yields because they’re “dogs,” or undesirable. Remember: When a stock goes down, its yield goes up.

(As a side note, I take offense to any term that describes man’s best friend in an unfavorable light.)

According to Barron’s, the Dogs of the Dow have an average yield of 3.7%. That’s twice as good as the S&P 500 Index.

A 3.7% dividend isn’t bad.

But there’s a new version of the Dogs strategy, and its average yield is almost 20%.

These Dogs Are Ready to Run

Barron’s recently looked at a new Dogs of the Dow strategy.

It’s a portfolio of the 10 highest-yielding stocks in the small-cap Russell 2000 Index with market values over $1 billion.

Barron’s calls them the “Small Dogs of the Dow.”

It found that over the past decade, the Small Dogs’ average dividend yield was almost 20%.

That dwarfs the 1.7% yield for the Russell 2000.

The Full List of the Small Dogs of the Dow

Ticker Name Dividend Yield
HCC Warrior Met Coal Inc. 21.7%
DHC Diversified Healthcare Trust 13.8%
NYMT New York Mortgage Trust Inc. 12.6%
GEO Geo Group Inc. 11.3%
VGR Vector Group 11.2%
ARR Armour Residential REIT Inc. 11.2%
APAM Artisan Partners Asset Mgmt. Inc. 11.0%
SFL SFL Corp. Ltd. 10.5%
UNIT Uniti Group Inc. 10.4%
CXW Corecivic Inc. 10.4%

To use this strategy, simply buy all 10 of these stocks … or at least as many as you’re able to.

As you can see in the chart above, all of the Small Dogs pay a dividend of more than 10%.

So, when the market shows weakness, you’ll still be making money from the yields.

And when the market surges higher, history proves that you can expect solid returns.

When you factor in dividends, the Small Dogs have been on par with, or even better than, the market.

Considering the great run stocks had over the past decade, that’s a really big deal.


Ian King

Editor, Automatic Fortunes

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