The 2016 Dogs of the Dow

Munchy the Pooch
Giovanny Moreano | CNBC
Munchy the Pooch

As 2015 comes to an end, investors seeking dividend yields are targeting the "Dogs of the Dow," a strategy that's paid off more often than not.

The popular investment principle, also known as "High Yield 10," works by targeting the Dow stocks with the 10 highest dividend yields at the end of the year.

"It's simply a corollary to the strategy of buy low sell high," wrote Paul Hickey, co-founder of Bespoke Investment Group. "The stocks with the highest dividend yields are typically the ones that have been beaten down the most (hence the high yields)."

According to Bespoke, in 10 of the last 15 years, the "Dogs" have beaten the Dow by an average of about 1.3 percent. In 2015, however, the index is heading toward year-end with a 2 percent total return, while the dog stocks are up 4 percent.

While not a foolproof investment strategy, historical research shows that some of these stocks turn out to be long-term buying opportunities, Hickey points out.

Contact Investing


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    Get these newsletters delivered to your inbox, and more info about our products and service. Privacy Policy.