New Dogs of the Dow

This is an improved version of the popular Dogs of the Dow that invests in high yield dividend stocks from the Dow Jones Industrial Average Index.

The new investment strategy buys the 10 Dow stocks with highest combined "Dividend Yield + Share Buyback Yield" called the Shareholder Yield.

Screening Theme Dogs of the Dow New Dogs of the Dow
Investing UniverseDow Jones Industrial Average Dow Jones Industrial Average
Primary Theme   
Secondary Theme(s)   
RankingDividend Yield Dividend Yield + ShareBuyback Yield
Number Of Holdings10 10
Holding Period 1 year1 year


It is detailed in an ebook titled "New Dogs of the Dow - The proven, 5 steps system to beat the Stock Market" by Jack J. O'Malley.

In fact, this improved strategy is not new: in High Yield Investing, I mention that Shareholder Yield can be a good ranking parameter for value investors focusing on high yield stocks.

Several investors have also previously praised this updated version of the Dogs of the Dow.
  • James O'Shaughnessy updated his "Cornerstone Value" screen in the 2005 edition of "What Works on Wall Street" to rank stocks through Shareholder Yield instead of Dividend Yield.


  • Jack Hough (Smart Money Magazine) proposed this New Dogs strategy in his book "Your Next Great Stock: How to Screen the Market for Tomorrow's Top Performers" - Highly Recommended -

The ebook does not provide backtesting results but mentions a report published in the Jourbal Of Finance in April 2004 (the same report cited by Jack Hough in his book !) that shows that ranking the Dow stocks through Shareholder Yield is superior to Dividend Yield (backtest from 1983 to 2003).

The main added value of the ebook is the 5 steps (thereby justifying the catchy ebook's title) to compute the Shareholder Yield using Yahoo Finance.

Indeed, Stock Screeners do not have "Company Share Buyback" or "Company Share Repurchase" as screening variable. Therefore, if you want to follow this strategy, you'll have to do a bit of work.

In fact, you can get the list of New Dogs at SmartMoney: just check SmartMoney's New Dogs of the Dow Screen. Just select the top 10 stocks from the list.

O'Malley suggests that experienced investors could enhance their returns with 50% leverage (after consulting with a financial professional). It is quite hazardous to propose such strategy without showing max drawdown, standard deviation.

The ebook ends with the Top Dog System: the author's own way of investing in the strategy. Now, no results are presented to check if it is superior to the simple "New Dogs of the Dow". An "educated guess" is that the Top Dog System does improve performances but with higher volatility - which can be very risky with 50% leverage -

At 49$, I find it very expensive for a 50 pages ebook that essentially highlights an already known strategy. For 18$, Jack Hough's "Your Next Great Stock" is a much better value.





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