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The folks at Dow Jones Indexes sent out a release last night highlighting how the 30 Dow components have performed this year. McDonald’s is on pace to lead the Dow industrials, up 31% through Tuesday’s close. Meanwhile, IBM, Pfizer and Home Depot are all up more than 20% this year. Kraft Foods rounds out the top five, up more than 19% in 2011.
The Dow is up 6.2% this year, well outperforming the S&P 500′s 0.6% rise and the tech-heavy Nasdaq Comp’s 1.6% decline. The Russell 2000 index of small-cap stocks is down 4.5% year-to-date. Investors have flocked to the larger, more stodgy names in an attempt to combat the market’s heavy volatility.
While the Dow has outpaced the other major indexes, its return still falls short of the 11% rise it notched in 2010.
McDonald’s and Home Depot are the only Dow components on pace to register back-to-back top five performances in 2010 and 2011.
Other highlights include Caterpillar, which surged 69% in 2010, yet is down 2.3% this year. Hewlett-Packard was the Dow’s worst performer in 2010, off 18%. It had an even worse showing this year, down 39%.
19 of the Dow’s 30 components are in positive territory with three trading days remaining.
Bank of America takes the cake for worst performer of the year, down 59%. Alcoa hasn’t fared much, down 43% in 2011. And J.P. Morgan Chase is down 22% year-to-date.
Considering the Dow’s outperformance this year, it shouldn’t come as a surprise that the “Dogs of the Dow” had another winning year. The strategy says investors should buy the 10 highest-yielding Dow components at the beginning of the year in an effort to benefit from stable, high-dividend paying stocks.
The 10 Dow stocks with the highest dividend yields at the beginning of 2011 are up 13% year-to-date, not including dividend income, according to Bespoke Investment Group. Nine of the 10 components are up; DuPont is the lone laggard. Meanwhile, the other 2/3 of the Dow are down a combined 3.8%.
The “Dogs” underperformed the Dow as a whole from 2001 through 2010, but they are on pace for a second consecutive year of outperformance, showing there’s still some bark left in one of Wall Street’s classic strategies.
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MarketBeat looks under the hood of Wall Street each day, finding market-moving news, analyzing trends and highlighting noteworthy commentary from the best blogs and research. MarketBeat is updated frequently throughout the day, helping investors stay on top of what's happening in the markets. MarketBeat lead writer Mark Gongloff spearheads the MarketBeat team, with contributions from other Journal reporters and editors. Have a comment? Write to marketbeat@wsj.com or write Mark at mark.gongloff@wsj.com.
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