Looking for value stocks well-positioned for the coming year? It might be time to try “Dogs of the Dow,” a time-tested strategy that focuses on the five highest-yielding securities within each sector of the S&P 500.
In the upcoming webcast, Dogs of the Dow: Why 2022 is the Right Time for Value, Andy Hicks, senior vice president, director of ETF portfolio management and research, SS&C ALPS Advisors; Paul Baiocchi, chief ETF strategist, SS&C ALPS Advisors; and Suzanne Siracuse, CEO of Suzanne Siracuse Consulting and host of the Big Reveal Podcast, will take a deep dive into the Dogs of the Dow investment strategy, as well as a discussion of one vehicle to help financial advisors put it into practice.
Specifically, the ALPS Sector Dividend Dogs ETF (SDOG) is built on the general belief and approach that stocks that underperformed the previous year but were supported by a positive dividend yield will turn around and outperform the following year. Utilizing this strategy can highlight many value companies and companies with solid yields.
“SDOG provides the potential opportunity to capture above-market returns and high dividend income in a disciplined, diversified, and transparent structure,” according to ALPS Advisors.
This fund takes the Dogs of the DOW approach and applies it to the ALPS sector strategy. ALPS takes the five highest-yielding stocks from each GICS sector (excluding real estate) and puts them into a composite index. This provides an opportunity for the fund to capture performance in sectors that previously have not done as well, such as industrials, financials, consumer staples, and healthcare, that are positioned to perform strongly in a more hawkish Fed environment.
“Dividend yield is a proven factor to screen for value, and we believe isolating the screen on a sector-by-sector basis helps to identify value and equity income opportunities across all sectors of the market in a high conviction manner,” according to ALPS Advisors.
SDOG is a good fund if you believe that growth will continue to face difficulties in an environment of rising interest rates. Its place in a portfolio can come from small portions of equities and fixed income, as it is an alternative play that many investors are seeking right now as they adjust their portfolio allocations to be leaner on the fixed income side.
Financial advisors who are interested in learning more about the Dow investment theory can register for the Tuesday, March 1 webcast here.