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Does the 'Dogs of the Dow' strategy work better in blue chips?

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  • Terence Tai-Leung Chong
  • Kin Keung Luk

Abstract

The 'Dogs of the Dow' strategy is a dividend-yield trading strategy, which invests in stocks that give the highest dividend. This article examines whether the 'Dogs of the Dow' strategy is profitable in the Hong Kong stock market. Using the data from 1992 to 2007, we show that a portfolio consisting of the top dividend-yielding stocks generates a negative return for investors, whereas a portfolio with top dividend-yielding Hang Seng Index constituent stocks can fetch a positive return of about 8% per year. The result is in agreement with that of McQueen et al. (1997).

Suggested Citation

  • Terence Tai-Leung Chong & Kin Keung Luk, 2010. "Does the 'Dogs of the Dow' strategy work better in blue chips?," Applied Economics Letters, Taylor & Francis Journals, vol. 17(12), pages 1173-1175.
    • Handle: RePEc:taf:apeclt:v:17:y:2010:i:12:p:1173-1175
    DOI: 10.1080/17446540902845495
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    Cited by:

    1. Doh-Khul Kim, 2019. "The Dogs of the Dow Theory ¨C Is It Valid?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(5), pages 1-43, May.
    2. Doh-Khul Kim & Michelle Nguyen & Kyle Arbet, 2020. "Does the Dogs of the Dow Theory Work at the Sectoral Level?," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 12(9), pages 1-46, September.

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