- With the yield of the 2 year US Treasury continuing to plummet, now at only 1.39%, some investors are searching for different ways to generate income while earning a decent return.
- Dividend stocks like those contained in the Dogs of the Dow are one of the easiest ways for investors to generate passive income.
- Average Current Yield of 4.18%.
A monthly performance review of Durig’s Dogs of the Dow Portfolio that explores several benefits that income producing investments such the Dogs of the Dow can help to provide.
- Lifetime Return of 12.87% (annualized)
- Year-to-Date Return of 8.30%
- Alpha of 4.89 (vs benchmark)*
- Beta of 0.77 (vs benchmark)*
- Average Current Yield of 4.18%
Many investors look to income producing investments for their ability to aid in supplementing and diversifying income and for their relative stability in tough markets.
With the yield of the 2 year US Treasury continuing to plummet, now at only 1.39%, some investors are searching for different ways to generate income while earning a decent return.
Looking for income? Look no further.
An excellent example of an investment that is designed to bridge this gap are the stocks held in Durig’s Dogs of the Dow Portfolio, which hold the benefit of being blue chip, meaning they are very large companies with long, well established histories. Dividend stocks like those contained in the Dogs of the Dow are one of the easiest ways for investors to generate passive income because investors are essentially paid for owning them, collecting over 4% and far better than most money market rates.
Ben Kirby, a Money Manager at Thornburg Investment Management, explains how he weathers significant bouts of market volatility and downturns in an interview with CNBC:
To hedge against a possible recession in the next two years, Kirby is sticking to stocks that pay investors while they hide out:
“I like dividend-paying equities. To me they’re one of the most attractive asset classes today, because hands you win, and tails you don’t lose too much,” Kirby said. “If stocks keep going up, your dividend-paying stocks will participate in that and … if stocks decline and we do go into a recession, then your dividend-paying equities can be defensive.”
One of the most common types of income producing investments are bonds, such as those held in our very successful Fixed Income 2 (FX2) Managed Income Portfolio which is also a large component of the Income Aristocrats Portfolio.
Continued Historical Outperformance
The design of the Dogs of the Dow enables the portfolio to target some of the highest yielding stocks of the Dow Jones Industrial Average (DJIA), which has led to significant historical outperformance of its peers over time. The portfolio has an annualized lifetime return of 12.87%, exceeding the annualized lifetime return of the closest benchmark (SPDR Dow Jones Industrial Average ETF) by over 3% each year.
This Month’s Featured Company
Walgreens (NYSE:WBA) is another one of the blue chip companies in the Dogs of the Dow Portfolio. Founded in 1901 as a small corner food store in Chicago, Walgreens has grown to be the second largest drug store in the United States, and has a presence in every state with over 9,500 locations. In fact, 78% of the U.S. population lives within five miles of a Walgreens store, with Walgreens serving more than 8 million customers every day.
Walgreens has also done an excellent job of adding shareholder value through its dividends paid to stockholders, and is very close to being a dividend aristocrat having steadily increased dividends for the last 15 years, from just 5 cents to nearly 50 cents, representing an increase of almost 10x.
Going forward, Walgreens looks to be adding even more value for its customers through new services, most recently with its launch of on demand delivery through a partnership with popular delivery service Postmates.
Walgreens even looks to be exploring the idea of “store to door” drone delivery. The introduction of innovative new services such as these should help Walgreens to remain a key player in the pharmacy and drugstore arena for many years to come.
Durig’s Dogs of the Dow Portfolio has continued its strong historical performance, significantly outperforming its closest benchmarks in lifetime return. The blue chip dividend stocks in the portfolio help to provide investors with exposure to some of the highest dividends of the Dow Jones, while also aiding to diversify and supplement income. Additionally, the low correlation of the portfolio to the overall market aids in reducing volatility and dampens the impact of market downturns, helping you to sleep peacefully at night.
For those searching for income and yield as interest rates decline, Durig’s Dogs of the Dow Portfolio looks to be an excellent choice, and blends well with Durig’s other successful investment solutions.
For More Information
Durig Capital has several high yield portfolio strategies available, click below to learn more.
TD Ameritrade Advisors
Durig is now offering its highly successful Fixed Income 2 (FX2) Portfolio, the Dividend Aristocrats 40 Portfolio, and the Income Aristocrats Portfolio to clients of other Registered Investment Advisors through segregated accounts at TD Ameritrade Institutional. Please ask us to learn how this might work for you and your current advisor.
Disclaimer: Past performance is no indication of future success. Any performance shown is this publication is as of 10-3-19. * The Primary Benchmark used is SPDR Dow Jones Industrial Average ETF. The high yield strategies presented in this review by Durig Capital may not be suitable for all investors. This is not investment advice from Durig Capital, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision.