There a few mutual funds that invest in the Dogs of the Dow. However, this is not just for market timers. These 'dogs' are also among the best stocks for dividends. The "dogs" represent the 10 highest-paying dividend stocks the Dow Jones Industrial Average Index of any given prior year. Because price often moves in opposite direction as dividend yield, the Dogs of the Dow also have the distinction of being among the lowest performers in terms of price gain.
Hence a contrarian investing strategy might have an investor looking for bargains on stocks that are positioned to have a good year. However, a more widely applied use of the Dogs of the Dow is to capture the highest-yielding stocks for income purposes.
Mutual Funds Investing in Dogs of the Dow
There are only a handful of mutual funds and ETFs that invest in the Dogs of the Dow and none of them hold 100% "dogs;" they typically represent around 50% or so of these funds' portfolio holdings:
- Hennessy Balanced Fund (HBFBX): 50% of assets in the Dogs of the Dow, 50% in bonds.
- Hennessy Total Return (HDOGX): 75% in the Dogs, 25% in bonds.
- ALPS Sector Dividend Dogs ETF (SDOG): Starts with S&P 500 stocks and invests in the top dividend paying names.
Investing in Dogs of the Dow mutual funds can be a good way for investors to gain access to value stocks while earning income and dividend mutual funds can be wise alternatives to bond funds, albeit more risky, in low or rising interest rate environments. However, investors should be cautioned that they are concentrated within the value objective and may not be well-diversified.
Disclaimer: The information on this site is provided for discussion purposes only, and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell securities.