No. of Recommendations: 6
I don't think the Dogs of the Dow strategy is as much an argument for dividends, per se, as it is an argument for dividend yield as a valuation metric.
Dividend yield works for the stock market in general as a valuation metric. I had AI generate a table of peak dividend yields followed by the next 10 year annualized return (keep in mind the dividend yield has been declining for many decades so the peaks keep getting smaller)
| Peak year | Peak dividend yield | Macro context | Next 10-year annualized total return |
| --------- | ------------------- | ------------------------------------ | ------------------------------------------------------- |
| **1932** | **~13–14%** | Great Depression bottom | **~15–17% / yr** |
| **1949** | ~7–8% | Post-war recession, industrial reset | **~14–16% / yr** |
| **1974** | ~5.5–6% | Oil shock, inflation, bear market | **~13–15% / yr** |
| **1982** | ~6% | Volcker disinflation peak | **~15–17% / yr** |
| **2009** | ~3.5–4% | Global Financial Crisis | **~13–15% / yr** |
| **2020** | ~2–2.5% | COVID shock | **~10–12% / yr** *(still incomplete but tracking high)* |
I don't know how actionable this is, but kinda interesting.
