It’s Dog Days for the Dogs of the Dow. But 2022 Might Be Looking Better.

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The dogs are in the doghouse again. The Dogs of the Dow, the 10 Highest-Yearning Stocks in the Dow Jones Industrial Average,
Based on November 24 prices it has returned 10.6% in 2021 (including dividends), behind the index’s 18.9% total return and the S&P 500‘s
26.8%. While 2021 isn’t over, the Dogs are on track to outpace the Dow for four of the past five years.

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Dogs are popular income and opposite investments. Most investors rebalance annually at the end of the year. The Idea: Buying the dogs each year allows them to be swung into financially sound, high-dividend stocks.

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Next year could be better. A portfolio of 10 potential dogs yields an average of 4%, compared to 1.7% for the Dow and 1.3% for the S&P 500. The dividend on all 10 looks safe. The Dogs offer an alternative to low-yield bonds with double the 30-year Treasury yield. This year’s strategy has been hurt by the decline in two dogs, Amgen and Verizon Communications.,
And just one big winner: Chevron,
Up 39% with a 4.8% yield. Based on current yields, nine out of 10 are likely to return. Cisco Systems Might Leave for Intel,
The yield of which is only one tenth behind a digit.

One factor working in favor of the 2022 dogs is appraisal. Based on projected 2022 earnings, seven out of 10 have a price/earnings ratio of 12 or less — compared to S&P’s multiples of 21.

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The knock against the dogs is that it has become a stable portfolio of old economy stocks. The Fastest Growing Dow Shares Have Yields Less Than 2% — Microsoft,

Apple,

Except for Home Depot- and stock prices plummeting, Dog Camp isn’t likely to collapse. At the end of 2009, the $10,000 investment in Dogs would have grown to nearly $40,000 from $46,000 for the Dow, baron’s calculates.

next week

Monday 11/29

National Association Realtors releases its Pending Home Sales Index for October. The consensus estimate is for 117 readings, roughly even with the September figure. The index, a forward-looking indicator of home sales based on contract signing, fell 8% year-on-year in September and has declined for four consecutive months from last year’s levels.

Tuesday 11/30

Bank of Nova Scotia,

Global Foundries,

Hewlett Packard Enterprise,

NetApp,

salesforce.com,
and Zscaler reports earnings.

S&P Corelogic For September, Case-Shiller releases the National Home Price Index. Economists forecast a 19.5% year-over-year gain, slightly lower than August’s 19.8% jump, the fifth consecutive record increase for the index.

Institute for Supply Management releases its Chicago Purchasing Managers Index for November. The reading is expected to be 68.9, roughly even with the October figures. The index is slightly below its record peak, which was hit in May.

conference board releases its Consumer Confidence Index for November. The consensus call is for a reading of 110.4, down about three points from October. The index is sharply down from its highs since reaching this summer, due to inflation concerns.

Wednesday 12/1

CrowdStrike Holdings,
Okta, PVH, Royal Bank of Canada,
snowflake, splunk, synopsis,
and Viva Systems report quarterly results.

ADP release Its national employment report for November. Private sector employment is expected to increase to 510,000 jobs after an increase of 571,000 in October.

census Bureau Reports data on construction expenses. Economists forecast 1% month-on-month growth for the construction outlay at a seasonally adjusted annual rate of $1.59 trillion.

Thursday, 12/2

canadian imperial bank of commerce,

Cooper Cos., DocuSign,

dollar general,

kroger,

Marvel Technology,

Toronto-Dominion Bank,
And Ulta Beauty holds conference calls to discuss earnings.

Labour Department Preliminary jobless claims report for the week ending November 27. Claims hit a 52-year low in last week’s report, and the four-week average is now slightly higher than pre-pandemic levels.

Friday 12/3

Bureau of Labor Statistics Releases jobs report for November. Economists forecast 525,000 benefits for non-farm payrolls, and a tenth of a percentage point for the unemployment rate to tick up to 4.5%.

bank of montreal
Reports fiscal fourth quarter 2021 results.

ISM issues Its services PMI for November. The consensus estimate is for 65 readings, versus October’s 66.7, which was a record for the index.

write to Andrew Berry [email protected] Feather

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