The Dogs of The Dow Investing Strategy Explained
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Market Update
Tesla's earnings release: Increase in operating profit from $3.7 billion to $3.9 billion. Expected earnings were $1.13 per share, and Elon posted a $1.19. Revenue: $24.32 billion vs $24.16 billion. This month the stock price rose close to 50%, with a $30 increase just this week. This could all be due to the $200 drop in price since September 2022 but what was that old saying?
"What goes down must go up...". Wait, that’s not it…
Regardless, we are heading into a recession unlike any other, but is Tesla set to weather the storm? Only time will tell.
However, maybe not for Bitcoin after dropping $50,000 in 2022 we have a very sizable leap from its prior range of $16,000 all the way to $23,000 in the first 2 weeks of January. Is Bitcoin back?
It’s now staying in a tight range of around $30,000, could this be the hedge against inflation or maybe even a sound long-term investment? Hopefully, the month of February will give rise to the answers we seek, and with the housing & stock market taking massive hits the only thing outperforming Bitcoin & Tesla is Gold.
Gold has increased by 150 points since the beginning of the new year. The prior week alone we saw a 32-point increase, which would have netted you a $3200 return from one contract. There can be a couple of factors for this: April 2022- September 2022 Gold dropped by roughly 400 points, and with such a steep retraction most commodities will revisit the resistance that they dropped from which is around the 2000 range. We just hit 1950.
With inflation tearing through the world economy and a recession looming, I think it’s safe to say that we need to sit on our hands before making a final decision. There’s a lot of “up in the air” in the market right now and it will take some time for the dust to settle so we can see which direction we’re headed.
The Dogs of the Dow
What is it?
The Dogs of the Dow is an investing strategy that focuses on investing in the top 10 highest dividend-yielding stocks in the Dow Jones 30 index every single year. The Dow Jones Industrial Average Index, also known as The DIJA or just “The Dow”, is an index of only 30 large companies, weighted by price. The index is the 2nd oldest among US market indices and was created by Mr. Charles Dow, the editor of The Wall Street Journey and co-founder of Dow Jones & Company.
Here are some of the companies included in the Dow Jones.
American Express Co
Apple Inc
Boeing Co
Caterpillar Inc
McDonald’s,
Johnson & Johnson
Walt Disney Co.
And 23 others.
Here’s how it works
Companies listed on the Dow are determined to be “blue-chip stocks” meaning they’re well-established and financially sound businesses with market caps in the billions. These companies don’t alter their dividend policies very often, if at all.
Because dividend yield is a function of share price (see formula below), when a stock’s yield is high, it could mean that its share price has fallen but the dividend has remained the same.
