This simple exchange strategy will win until 2021

S.Tokens were generally mixed on Tuesday, with key market benchmarks staying near all-time highs. The S&P 500 (SNPINDEX: ^ GSPC) and Dow Jones industry average (DJINDICES: ^ DJI) As of Monday, they have loosened their records while the Nasdaq Composite (NASDAQINDEX: ^ IXIC) also lost a bit of ground and is further from its high water mark.


Percentage change

Point change




S&P 500



Nasdaq Composite



Data source: Yahoo! Finances.

Many investors would prefer a simple way of investing that doesn’t require them to obsessively look at the stock market every day. One alternative that many investors have turned to over the years is to choose from stocks known as Dogs of the Dow.

Despite some tough years lately, the Dogs of the Dow strategy is easy to use and has outperformed the market so far in 2021. Let’s take a closer look at this to find out why.

How the 2021 Dogs of the Dow has fared so far


Price change in 2021 since the beginning of the year

Dow Jones Industrials


Dogs of the Dow


Source:, as of April 6, 2021.

The basics of the Dogs of the Dow strategy

If you are looking for a simple investment strategy it is hard to get easier than the Dogs of the Dow. The 10-share portfolio is made up of the highest-yielding dividend stocks in the Dow Jones Industrial Average at the beginning of each year, and you would buy them for equal dollar amounts. You then hold the shares for a full year.

To apply the strategy in the following year, just look at the updated dividend yields and make substitutions if necessary. Often there is significant overlap, making year-to-year adjustments easy.

Image source: Getty Images.

Usually the Dogs of the Dow method works well when value investing is in vogue, as Dogs of the Dow stocks tend to generate high returns as their stock prices have fallen relative to other Dow components. When these companies recover, they can outperform the broader market. That has been the case for six of the last 10 years.

Why are the dogs doing well in 2021?

This year the dogs get help from market trends. They include:

  • A recovery in the energy sector. Chevron (NYSE: CVX) is up 24%, and while the oil and gas giant makes up only a small fraction of the Dow’s total weight, it has a lot more clout among the dogs.
  • A huge 42% recovery in drugstore retail Walgreens Boots Alliance (NASDAQ: WBA) definitely played a big role. Walgreens is the best performer in the entire Dow, and Dogs investors get an oversized chunk of those returns as their impact on the Dow is minimal due to its low stock price.
  • Several hot stocks that soared in 2020 have taken a hiatus so far this year. For example, Apple (NASDAQ: AAPL) and Nike (NYSE: OF) are both so far down this year.

Of course, 2021 is a little over three months old, so it’s too early for the dogs to declare victory. However, if you’re looking for blue-chip stocks that can stand the test of time, the 10 stocks that make up the 2021 Dogs of the Dow have all the business strengths that make them a solid investment choice for dividend-hungry investors.

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Dan Caplinger owns shares in Apple and Nike. The Motley Fool owns and recommends shares in Apple and Nike. The Motley Fool recommends the following options: long calls in March 2023 for $ 120.0 to Apple and short calls in March 2023 for $ 130.0 to Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.

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