Revisiting the “Dogs of the Dow”

Revisiting the “Dogs of the Dow” Strategy for 2013

Published Tue, Dec 11th, 2012   Louis Basenese, Chief Income Strategist

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Investing isn’t supposed to be easy.

Or at least not as easy as, say, buying an equal amount in each of the Dow’s 10 highest-yielding stocks on January 1… waiting 366 days… and then replacing that basket of stocks with the new set of highest yielders.

But, as it turns out, this simple strategy – known as the “Dogs of the Dow” – delivered impressive results in 2010 and 2011.

So impressive, in fact, that at the beginning of this year I took the time to evaluate the fundamentals for each of the 2012 Dogs to try and predict if the strategy would deliver solid results yet again.

My conclusion? They would.

So was I right?

With only a few weeks left in the year, let’s take the time today to find out. In the process, I’ll also share how you can check the performance any time you’re curious. Then we’ll take a look at the crop of Dow laggards contending for the opportunity to join the Dogs of 2013.

Simple and Beloved

Money manager Michael O’Higgins deserves credit for popularizing the Dogs of the Dow strategy in his bestselling book, Beating the Dow. And the famed Wharton Professor, Jeremy Siegel, added to the enthusiasm when he featured the strategy in his book, Stocks for the Long Run.

I can’t really say I blame investors for latching onto the strategy, either. Consider:

• It’s easy to implement and manage. Even a caveman can handle buying and selling stocks once every 366 days.
• It’s tax efficient. The strategy forces investors to hold stocks long enough to benefit from long-term capital gains tax rates. That’s no small feat, considering that nowadays, the average investor only holds a stock for about five months.
• It’s a conservative, income-oriented strategy by design. After all, it involves buying out-of-favor stocks (i.e. – value stocks) with above-average yields. And throngs of retirees and almost-retirees want conservative income.
• It works. Although past performance does not guarantee future results, we can’t ignore the track record. The Dogs outperformed the Dow and the S&P 500 in every decade except the 1930s and 1990s.

And lo and behold, it’s working again in 2012.

So far this year, the Dogs of the Dow are up 11.2% (including dividends), compared to a 10.7% return for the overall Dow.

Granted, the outperformance isn’t as strong as it was in past years. Take 2011, for example, when the Dogs rose 16.7% (including dividends), compared to an 8.4% rise for all 30 stocks in the Dow.

Still, there’s something to be said about earning this year’s returns with such a simple strategy.

If you ever want to check out the performance on your own, you can easily find the total return for the Dogs of the Dow and then compare it to the Dow’s.

The Perfect Dividend Strategy for 2013?

If dividend tax rates do spike higher in 2013, the Dogs of the Dow might be the perfect strategy to employ in an IRA account.

With that in mind, here’s a list of the companies that would make the list if the year ended today.

• AT&T (T)
• Verizon (VZ)
• Intel (INTC)
• DuPont (DD)
• Merck (MRK)I
• Hewlett-Packard (HPQ)
• McDonald’s (MCD)
• Microsoft (MSFT)
• Johnson & Johnson (JNJ)
• Pfizer (PFE)

Purists will argue that we need to wait until the last trading day of the year to compile the roster. But it’s unlikely to change very much. So it can’t hurt toget started doing our research, even if one or two companies drop out of the list.

Remember, the Dogs of the Dow are comprised of the highest-yielding stocks. But they likely earned this distinction because of poor stock price performance, not aggressive dividend hikes.

Case in point: Hewlett-Packard. Although the company raised its dividend by about 10%, it’s near the top of the list because share prices collapsed by about 50%.

And putting our hard-earned capital on the line based on dividend yield alone is a surefire way to get snared in the dividend yield trap.

Bottom line: Based on three consecutive years of solid performance, countless investors are bound to become devout followers of the Dogs of the Dow strategy in 2013. But please don’t be so naïve or lazy.

If we’re going to embrace the strategy in 2013, we need to do some more homework first. Specifically, we need to evaluate the Dogs based on multiple fundamental metrics, instead of just one. And I’ll do just that for you in a future column. So stay tuned.

Artificial Heart Provides An Extra 300 Years of Life

Published Tue, Dec 18th, 2012   Wall Street Daily Research

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Arizona-based SynCardia Systems is making life easier (and longer) for patients waiting for a heart transplant.

The company manufactures an artificial heart that replaces the organ’s two lower chambers that pump blood through the body. And it can keep patients alive longer while they wait for a donor heart to become available.

It’s portable, too. So patients can go home instead of staying at the hospital the whole time.

One New York City resident, Daquain Jenkins, was recently implanted with the technology. He received a real donor heart in August. But when it failed, doctors removed the heart and replaced it with SynCardia’s plastic alternative.

Dr. Anelechi Anyanwu, who performed Jenkins’ operation, says that while the technology is certainly adequate, the company understands that there’s a lot of room for improvement…

“In a way, it’s just a crude mechanical pump that just moves blood in one direction, and that’s where we are now,” he says. “But there are several developments going on, for example – to make smaller pumps, to have better power supplies and ultimately to have a pump [where] the whole mechanism is within the body.”

So it might not be the most sophisticated technology at this time. But even with the current version, the company has provided patients with 300 years of extra life so far.

And as the technology becomes more advanced, some heart surgeons believe that a permanent artificial heart may soon be an option for some patients.

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ReggieMiddleton (ReggieMiddleton) on Twitter

ReggieMiddleton (ReggieMiddleton) on Twitter

Dividend Yield - Stock, Capital, Investment: Dividend Weekly Stock Report 49/2012 | Free PDF Download

Dividend Yield - Stock, Capital, Investment: Dividend Weekly Stock Report 49/2012 | Free PDF Download

I am trying to find something similar to this on the other candidate, however, thus far there is no history of his early development that is cohesive, chronologically detailed and verifiable.  If anyone has such a history, I would like to publish it along with Romney's .  Thanks !

  Bob
Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer 

HISTORY

1958
1963

The childhood narratives that inform the public’s perception of so many political figures — Abe Lincoln’s log cabin; George Washington’s cherry tree; JFK’s privileged youth — often assume the shape of myth, or at least of very-tall-tale, with the occasional, grudging nod to hard, historical facts. In the current race for the White House, the candidates’ upbringings are once again subjects of conversation — and of sometimes willfully fact-averse allegation from the spittle-flecked fringe. (“Obama’s a Kenyan!” “Romney’s a bigamist!”)

But then, there’s no reason at all why a candidate’s younger days should not be of interest to pundits and to the electorate as a whole. As Wordsworth long ago observed: “The child is father of the man.” Even if we wanted to escape our earlier selves, we can’t; consciously or unconsciously, for better or for worse, our earliest days inform our later years.

In other words: Wherever we go, it’s often where we come from that really matters.

In the 1950s and ’60s, LIFE magazine spent a lot of time with the parents and the kids — and, occasionally, the grandkids — of a well-known American family, the Romneys of Michigan. George W. Romney (1907 – 1995), was for eight years the president of American Motors Corporation and, from 1963 to 1969, served as the Republican governor of Michigan. (In the early ’60s he feuded, both privately and publicly, with GOP right-wingers like Barry Goldwater, whose deeply conservative views on pressing issues like the civil rights movement struck the moderate Romney as out of step with the times, and counter to what he saw as the party’s traditions.)

[See all of TIME.com's Mitt Romney coverage here.]

George Romney’s second son, Willard Mitt Romney, has followed the same path taken by the children of countless eminent families in the United States. Kennedy, Bush, Cuomo, Daley, Roosevelt — the list of family names associated with the presidency, Congress, governorships and mayoral seats around the country is tremendously long, with hardly anyone ever blinking an eye when a young man or woman decides to follow a family tradition and jump into the political ring.

That Mitt Romney did just that is no surprise; that he’s gotten as far as he has — especially in light of his Mormon faith, which for many Americans remains a something of a mystery — says as much about Romney’s ambition and his confidence as it does about his upbringing.

The photographs in this gallery, meanwhile — most of which never ran in LIFE — are hardly meant to capture the “real” Mitt Romney, or to somehow miraculously convey the essence of the Romney family as a whole. (Many of the pictures focus not on Mitt, but on his father, mother and other family members.) After all, the man’s own statements and actions as a public figure over the past two decades provide more than enough informational grist — for supporters and detractors, alike — while a few dozen pictures can never come close to distilling the full character of a large, complex, accomplished family.

To pretend or imply, then, that this is anything like a definitive look at Mitt Romney as a boy or a man would suggest an outsized faith in one’s powers rivaling the unmitigated chutzpah of, say, a politician.

Nevertheless, it remains clear that President Obama’s and Governor Romney’s backgrounds are part of the larger national conversation this fall. Electing a commander in chief solely on the basis of his experience of childhood would, of course, be absurd; but ignoring the public curiosity about where these men came from would be equally silly. Both candidates, after all, have proudly proclaimed that the people who raised them unquestionably shaped the way they see the world.

These photos, ultimately, offer one, small window through which to view the world in which Mitt Romney was raised.  His father (“lean, hard George Romney,” as LIFE put characterized the AMC chairman and president in 1958) is here, as are his mom and his siblings. Some of the pictures feel rather stagey; others seem genuinely informal and, as it were, intimate; all of them suggest a close-knit family defined, in large part, by its faith and by the pursuits of its dynamic patriarch. Taken as a whole, they’re one more piece to the puzzle that is the current Republican candidate for president. This is not an exhaustive portrait, but instead a glimpse into what it was sometimes like — at least when reporters and photographers were around — growing up Romney.

 http://life.time.com/history/mitt-romney-photos-from-the-gop-candidates-early-years/#ixzz29TVxiswg

Our communist C. I. C.

This Hollywood movie describes Obama's ideological father.  Even though he points out a strong physical resemblance, Frank Marshall Davis (loyal communist supporter of Stalin) was a teacher, mentor and ideological role model for Obama.  This is one of the top documentaries of 2012.  It will hold your interest from beginning to end.

                                 http://www.ourcommunistcommanderinchief.com/

Johnny Cash 1969 | Voice of America: Johnny Cash in 1969 | LIFE.com

Johnny Cash 1969 | Voice of America: Johnny Cash in 1969 | LIFE.com

How to Get to Mars. Very Cool! HD - YouTube

How to Get to Mars. Very Cool! HD - YouTube

Tomorrow's Democrat: Who Could Run in 2016? -- PICTURES - NationalJournal.com

The speech given by Castro was reminiscent of the 2004 convention speech given by Obama.  Very smooth and hypnotizing delivery wrapped around words that said very little, were often untrue and perhaps meant to distribute feeling to the listeners.  Given the history of this kind of speech we need to be vigilant and insure that we don't make the same mistake again.

Tomorrow's Democrat: Who Could Run in 2016? -- PICTURES - NationalJournal.com

Tomorrow's Democrat: Who Could Run in 2016? -- PICTURES

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By Brian Resnick

Updated: September 5, 2012 | 10:09 a.m.
September 4, 2012 | 5:23 p.m.

Is it too early to be thinking about the 2016 presidential race?

Perhaps, but along with some familiar names like Hillary Rodham Clinton, there is an emerging crop of Democrats whose careers will be worth following. By getting to know this next generation, we can get a sense of where the national political landscape is heading.

Here, National Journal compiles a list of rising party stars and old hands who may breathe new life into the Democratic Party.

The Language of Success - NationalJournal.com

The Language of Success - NationalJournal.com

Is There A Message Here from the Storm Gods?

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By Michael Hirsh

Updated: September 5, 2012 | 12:52 p.m.
September 5, 2012 | 12:17 p.m.

First it was Isaac, the hurricane that did a menacing drive-by in Tampa. Now a storm forecast has sent the Democrats scurrying indoors in Charlotte. It could be just a coincidence, of course. The weather, like justice, is blind. But perhaps we also ought to entertain the possibility that God Himself is seriously displeased with the state of American politics.

I mean, why wouldn’t He be?

I’m the last person to try to channel the wishes of the Almighty (you’ll need to turn on Fox News for that). But just consider the messaging here. Isaac’s path into the Gulf coast and New Orleans delivered a scary reminder of Katrina. Thus it could be interpreted as a humbling reminder to increasingly libertarian Republicans that good government is still necessary. 

The projected storm system that prevented the Dems from trying to duplicate Barack Obama’s Greek-columned annunciation as a hope-and-change savior in Denver was, perhaps, an equally humbling message: Don’t overpromise, pal. ‘Cause you’re gonna fail.

Or maybe it’s just that the Man Upstairs was upset about being left out of the Democratic platform, as Republicans suggested yesterday that He would be.

There is an old saying in American politics: “The Lord looks after drunks, children and the USA.” But given the disastrous policies of recent years, and the unremitting polarization of American politics, it’s not beyond reason to wonder whether the Lord has come to believe that we Americans are using His name in vain. That we are no longer doing a very good job, in other words, of being “one nation under God,” that the pluribus is no longer much of an unum.

Just a possibility...

Some U.S. Generals Unlikely to Get Their Way on Afghanistan - The Atlantic

Some U.S. Generals Unlikely to Get Their Way on Afghanistan - The Atlantic

Some U.S. Generals Unlikely to Get Their Way on Afghanistan

inShare14AUG 5 2012, 9:00 AM ET 6

Several military commanders say they want to keep troops in the country, but the White House seems intent on winding down.

A U.S. Army soldier reacts inside an armored vehicle after his comrade was wounded at patrol by an IED in southern Afghanistan. (Reuters)

During the presidential-election campaign the positions of President Obama and presumptive GOP nominee Mitt Romney have converged on the issue of withdrawing most U.S. forces from Afghanistan by the end of 2014. Neither the Obama administration nor the Romney campaign has made clear, however, how fast the remaining force of 68,000 U.S. troops should be pulled out between now and that deadline. With an important milestone approaching next month - when the last of the 30,000 "surge" troops will exit the country - U.S. military commanders are indicating their desire to keep as many of the remaining troops in Afghanistan for as long as possible.
In late May, for instance, Lt. Gen. Curtis Scaparrotti, the second-in-command in Afghanistan, told NPR: "Personally, I would like to stay at 68,000 through the first part of [2013], and then again we'll make an assessment." The top commander, Gen. John Allen, told the Senate Armed Services in March, "Sixty-eight thousand is a good going in number, but I owe the president some analysis on that."

---

MORE FROM NATIONAL JOURNAL:
Candidates' Tricky Vacations
A Static Presidential Contest?
The Next America
Debating Jobs on the Campaign Trail

---

U.S. commanders are angling for maximum force levels because, in their view, the situation in Afghanistan is already reaching its maximum in risk tolerances. "In terms of the mission, the main risk we face is not finishing the work of clearing the Haqqani network from areas in the east that are very close to Kabul," said Lt. Gen. Dan Allyn, until recently the top U.S. military commander in Afghanistan's Regional Command East, speaking on Thursday at the Institute for the Study of War in Washington. If the United States keeps the remaining 68,000 troops in-country through next year's fighting season, it can finish that job, he said. Otherwise U.S. commanders will have to hand the burden to Afghan Security Forces that are still struggling to stand on their own. "That's not an insignificant risk," he said.
If history is any judge, however, the generals may not get their wish for a pause in troop withdrawals. The White House is reportedly considering a plan backed by National Security Adviser Thomas Donilon to pull 10,000 more troops out by the end of December, for instance, and then 10,000 to 20,000 more by next June.
"I'm very concerned, because the track record of our generals getting their way on troop levels is not good," said retired Gen. John "Jack" Keane, the former vice chief of staff of the Army and an architect of the Iraq surge, also speaking at the Institute for the Study of War. The last U.S. commander in Iraq wanted to maintain a residual force of roughly 20,000 troops, he noted, and got zero. U.S. commanders likewise requested an Afghan surge of 40,000 to 60,000 troops, and had to settle for 30,000. U.S. commanders wanted those surge forces to remain in Afghanistan through 2013, a request that was also rejected when the September 2012 deadline was set for their withdrawal. "So I hope General John wins the argument about keeping the current level of forces in place, but if he does, it will be the first time one of our generals won an argument on force levels," Keane said. "I think the national-security team will do what they can to reduce the number."
Talk of an accelerated withdrawal comes even as some NATO planners are proposing that the Afghan Security Forces be reduced from 352,000 to 230,000 after 2015, as a way to save $2 billion a year in international funding. "So now we are talking about pulling 100,000 NATO troops out of Afghanistan and shrinking Afghan forces by 100,000 plus, even as we leave in place these sanctuaries for Taliban insurgents inside Pakistan," Keane said. "I think that will bring the Afghan mission to the brink of failure."
This article originally appeared at The National Journal, an Atlantic partner site.

DNC Set to Move Obama Speech from 74,000 Stadium to 20,000 Arena – Patriot Update

DNC Set to Move Obama Speech from 74,000 Stadium to 20,000 Arena – Patriot Update

Real Estate | Equifax Finance Blog

Real Estate | Equifax Finance Blog

Normally, I'd be looking to take some profits, however AAPL shows no signs of slowing down.  A new I-Pad, Apple TV, new MAC and God and Tim Cook only know what else.

Apple Inc. (AAPL) Reached the 52-Week High of $663.69

The prices of Apple Inc. shares have reached $663.69, which is 1.3% off the 52-week high of $672.4. Apple Computer Inc. designs, manufactures and markets personal computers and related personal computing and communicating solutions for sale primarily to education, creative, consumer, and business customers. Apple Inc. has a market cap of $606.02 billion; its shares were traded at around $663.69 with a P/E ratio of 15.2 and P/S ratio of 5.6. The dividend yield of Apple Inc. stocks is 0.4%. Apple Inc. had an annual average earnings growth of 63.5% over the past five years.

On July 24, Apple Inc. announced financial results for its fiscal 2012 third quarter ended June 30, 2012. The company posted quarterly revenue of $35.0 billion and quarterly net profit of $8.8 billion, or $9.32 per diluted share. These results compare to revenue of $28.6 billion and net profit of $7.3 billion, or $7.79 per diluted share, in the year-ago quarter. Gross margin was 42.8 percent compared to 41.7 percent in the year-ago quarter. International sales accounted for 62 percent of the quarter’s revenue.

This month, Director Arthur D. Levinson sold 7,500 shares of AAPL stock. VP, Corporate Controller Betsy Rafael and Director Arthur D. Levinson sold shares in May. Senior Vice President Scott J. Forstall and Director Millard S. Drexler sold shares in April. CEO Timothy D. Cook and Senior Vice President, CFO Peter Oppenheimer sold shares in March.

Circle of Sparks

Obama Stalls in Michigan, Despite Auto Bailout

Interesting.  Is it because the bailouts are temporary and have done little to improve the economy.  Is it because the vast majority of the bailout went to support union officials?  What do you think?


Obama Stalls in Michigan, Despite Auto Bailout

Clients: How We Work: Dedicated Financial Advisors Veritat.com

Interesting development.  Veritat Financial Advisors are experts in all aspects of financial planning, including retirement planning, educational planning, insurance planning, estate planning, and debt reduction.  Eventually they will be combined with large analysis capabilities  In a rare combination of brains and brawn, LPL’s newly created subsidiary NestWise has acquired Veritat Advisors and plans to scale up the startup’s robust financial planning platform to reach the underserved middle market.


Clients: How We Work: Dedicated Financial Advisors Veritat.com

Best 5 Investment Picks for Midyear 2012

Best 5 Investment Picks for Midyear 2012

Rick Perry Won't Implement Obamacare In TX : Freedom Outpost

Rick Perry Won't Implement Obamacare In TX : Freedom Outpost

Going Global

Going Global

A Different Perspective on Chief Justice Roberts' Ruling

While I wouldn't want or condone anyone doing harm to Chief Justice Roberts and I don't want to believe that Justice Roberts ruled for

political reasons rather than legal, constitutional reasons; I believe the following essay, by I. M. Citizen is

logical and deserves consideration when assessing the current political climate.  This perspective offers hope (perhaps belief)

that Obamacare will be a thing of the past.  If so then we should turn our planning into a November rout and offer the voters

a defined approach to unraveling Obamacare and replacing it with a real plan for improving our current (not so shabby) healthcare

process with logical change to the aspects of U. S. healthcare that need improvement.  A step-by-step plan that delineates these changes

has to be presented to voters as soon as possible. The plan should be without tax increases, without mortgaging our future, in effect

budget neutral.  It should also address the healthcare needs of all American Citizens.  Finally the plan will be purely healthcare and not try 

to encompass any and all needs of society.  Separate plans are also need to address other major problems(e.g. immigration).  I would

appreciate any constructive comments and thoughts you may have about this "different perspective".  

Bob
Politics is the gentle art of getting votes from the poor and campaign funds from the rich, by promising to protect each from the other. ~Oscar Ameringer 

Behind the Scenes of the Ruling-A Different Perspective of Robert's Decision

Chief Justice Roberts Is A Genius by I. M. Citizen

 

Before you look to do harm to Chief Justice Roberts or his family, it’s
important that you think carefully about the meaning – the true nature — of  

his ruling on Obama-care. The Left will shout that they won, that
Obama-care was upheld and all the rest.     Let them.  It will be a short-lived 

celebration.

Here’s what really occurred — payback. Yes, payback for Obama’s numerous,
ill-advised and childish insults directed toward SCOTUS.
Chief Justice Roberts actually ruled the mandate, relative to the commerce
clause, was unconstitutional. That’s how the Democrats got Obama-care going
in the first place. This is critical. His ruling means Congress can’t
compel American citizens to purchase anything. Ever. The notion is now
officially and forever, unconstitutional. As it should be.
Next, he stated that, because Congress doesn’t have the ability to mandate,
it must, to fund Obama-care, rely on its power to tax. Therefore, the
mechanism that funds Obama-care is a tax. This is also critical. Recall
back during the initial Obama-care battles, the Democrats called it a
penalty, Republicans called it a tax. Democrats consistently soft sold it
as a penalty. It went to vote as a penalty. Obama declared endlessly, that
it was not a tax, it was a penalty. But when the Democrats argued in front
of the Supreme Court, they said ‘hey, a penalty or a tax, either way’. So,
Roberts gave them a tax. It is now the official law of the land — beyond
word-play and silly shenanigans. Obama-care is funded by tax dollars.
Democrats now must defend a tax increase to justify the Obama-care law.
Finally, he struck down as unconstitutional, the Obama-care idea that the
federal government can bully states into complying by yanking their
existing medicaid funding. Liberals, through Obama-care, basically said to
the states — ‘comply with Obama-care or we will stop existing funding.’
Roberts ruled that is a no-no. If a state takes the money, fine, the Feds
can tell the state how to run a program, but if the state refuses money,
the federal government can’t penalize the state by yanking other funding.
Therefore, a state can decline to participate in Obama-care without
penalty. This is obviously a serious problem. Are we going to have 10, 12,
25 states not participating in “national” health-care? Suddenly, it’s not
national, is it?
Ultimately, Roberts supported states rights by limiting the federal
government’s coercive abilities. He ruled that the government can not force
the people to purchase products or services under the commerce clause and
he forced liberals to have to come clean and admit that Obama-care is
funded by tax increases.
Although he didn’t guarantee Romney a win, he certainly did more than his
part and should be applauded.
And he did this without creating a civil war or having bricks thrown
through his windshield. Oh, and he’ll be home in time for dinner.
Brilliant.