Dow Dividend Starting Months/Holding Periods
Some things you should know about the returns shown in the table
- The returns shown are the average (compound) annual returns for the
1, 2, and 3 year periods starting at the end of each month from
December 1978 through December 1998. That means the last one-year period
starts at the end of Dec. 1997; the last two-year period, Dec. 1996; and
the last three-year period, Dec. 1995.
- The returns are based on PRICE CHANGES ONLY. Dividends are
not included. This is different from the results presented by
- The analysis below ignores commissions.
- Tax consequences are not included since they vary by investors.
- Any spin-offs or distributions, such as Sear's spin-off off
Allsate in 1995, are treated by assuming that the shares received
are sold at the end of the month in which they are received and the
proceeds are used to buy more of the Dow stock that had the spin-off.
This is a different assumption than that used on the Historical Returns page.
- It is assumed that an equal dollar amount is put into each stock in
the strategy using the closing prices on the last day of the month.
- BTD5: (Beat the Dow 5) - The O'Higgins and Downes strategy
of buying the five lowest priced of the ten highest yielding Dow
- High10: Buy the ten highest yielding stocks in the
Based on the data in the table:
Start Hold for 1 year Hold for 2 years Hold for 3 years
Month BTD5 High10 BTD5 High10 BTD5 High10
Jan 13.70% 12.38% 16.18% 13.93% 14.90% 13.01%
Feb 16.01% 14.13% 17.13% 15.36% 15.73% 13.94%
Mar 14.81% 12.81% 16.87% 14.31% 15.35% 13.13%
Apr 16.13% 13.51% 17.69% 14.71% 15.72% 13.05%
May 16.48% 13.26% 16.11% 13.96% 14.68% 12.85%
Jun 15.99% 13.84% 15.95% 14.24% 15.07% 13.26%
Jul 17.34% 14.51% 16.10% 14.28% 15.70% 13.74%
Aug 16.50% 14.09% 16.22% 13.91% 16.55% 13.59%
Sep 15.95% 14.13% 16.40% 14.20% 16.55% 13.98%
Oct 17.92% 15.21% 17.61% 14.59% 16.43% 14.04%
Nov 17.56% 15.69% 17.83% 15.52% 16.01% 14.70%
Dec 17.05% 14.34% 18.14% 15.03% 15.81% 14.45%
The two most attractive times and hold periods are:
- The BTD5 has a higher return than the High10 in all cases.
- The best time to execute these strategies is late in the year. This may
be due to tax selling and year-end "window dressing" by portfolio managers.
These conclusions are similar to but not quite the same as those reached
previously based on data through 1996, two years less than the data used
in the table above. Click here to see the older
data and analysis.
- The BTD5 held for two years starting late in the year (buy in Nov. or
- The BTD5 held for one year purchased at the end of Oct. or in Nov.
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