It has been a successful year for a group of blue-chip stocks known as the “dogs” of the Dow Jones Industrial Average, a strategy popularized by investor Michael O’Higgins in the 1990s. These stocks have the highest dividend yield at the end of each year, with the aim of benefiting from potential stock price increases along with dividend payouts. Despite ongoing concerns about limited leadership in the market, the Dow Jones has seen a 4% increase this year, reaching a milestone of over 40,000 points. Notably, Nvidia has performed exceptionally well due to the increasing focus on artificial intelligence.
Among the 2024 dogs of the Dow, seven out of nine stocks have outperformed the index. One standout performer is Goldman Sachs, which has gained over 20% this year. CNBC Pro has been tracking the performance of these stocks and analyzing where they may be headed next. Verizon, with a dividend yield of 6.6%, has seen a 12% increase in shares this year, with analysts predicting further growth. On the other hand, Cisco has experienced a 4.5% decline in stock value, despite having a 3.4% dividend yield. Analysts are optimistic about a potential rebound for Cisco, citing growth drivers and low expectations.
Bank of America’s Tal Liani recently upgraded Cisco to a Buy rating, highlighting growth prospects in networking and security businesses. However, Goldman Sachs, the top performer among the dogs, has the lowest dividend yield at 2.4%. Analysts anticipate a slight decrease in stock price over the next 12 months, making it the only dog expected to pull back. Nevertheless, a majority of analysts still recommend buying the stock.
Overall, the dogs of the Dow strategy seems to have paid off well this year, with several stocks outperforming the index. While some concerns remain about market leadership, the solid performance of these blue-chip stocks indicates that investors may have found a successful investment approach for 2024.
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https://www.cnbc.com/2024/06/25/the-dogs-of-the-dow-are-doing-well-even-as-investors-chase-nvidia-higher.html