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Back to the dog pound: Dogs of the Footsie outperform in 2017

At the end of January, John Harrington tweaked the famous investment strategy known as the Dogs of the Dow, and applied it to UK stocks. How are the investments doing?

Dog and cat
Some Footsie cats wish they were dogs ...

It's been almost three months since we did our tweaked version of the Dogs of the Footsie, so it is time to check in and see how the pack is doing.

For those of you who missed it first time round, the virtual portfolio is constructed using the principles of the investment strategy known as the Dogs of the Dow. I tweaked it slightly and applied the principles to the FTSE 100.

To make life tougher (and a bit more realistic), the virtual portfolio was constructed with purchases being made at the offer price, while sales will be made at the bid price. I have assumed £15 dealing costs on each trade.

Here is how the portfolio started off, back at the end of January.

Let loose the dogs

As it happens, Capita Group has dropped out of the FTSE 100 but it keeps its place in the Dogs portfolio, which is just as as well as it has been one of the better performers so far.

Talking of which, how has the portfolio been doing?

Situation as of Thursday morning

Company

No. of shares

Total cost

Average price paid

Current bid price

Current value

Profit/ loss £

Profit/ loss %

AstraZeneca

23

£983

4,275.7p

4,738.5p

£1,087

£104

11%

Barratt Developments

206

£1,001

485.88p

562.5p

£1,159

£158

16%

BT Group

323

£1,002

310.15p

314.45p

£1,016

£14

1.4%

Capita Group

197

£998

506.72p

548.5p

£1,081

£82

8.3%

Legal & General

419

£1,000

238.78p

250.1p

£1,048

£47

4.7%

Marks & Spencer

293

£999

341.02p

344.6

£1,010

£10

1.1%

Persimmon

51

£1,000

1,960.41p

2,189p

£1,116

£117

12%

Royal Mail

239

£998

417.58p

421.4p

£1,007

£9

0.9%

TUI AG

84

£995

1,184.86p

1,083p

£910

-£86

-8.6%

Taylor Wimpey

589

£999

169.65p

194.2p

£1,144

£145

14%

 

  • Cash: £117 (including £93 of dividends)
  • Current market value of portfolio (including cash): £10,694

As you can see, helped by a handy £93 of dividend payments - and more to come (this is a high yield portfolio, remember) - the portfolio is £694 in profit.

On an initial investment of £10,000 even my 'O' level maths can work out that is a 6.94% gain in less than three months, which is impressive. Admittedly, £150 of that will disappear in dealing costs when we sell up but even so, over the same period the FTSE 100 has only risen 2.7% - though that excludes the effects of dividends.

Let's not count our chickens, however; we've got a number of clouds on the horizon - pension worries for the likes of Royal Mail and BT, terrorist attacks and wars for TUI, stamp duty for the house builders and Donald Trump for everyone.

As mentioned when the virtual portfolio was created, the idea is there will be no dealing until next February (worst Motorhead album title ever).

Traditionally, a "dogs" portfolio is done at the end of each year but there is nothing to stop you doing it whenever you wish. There is no guarantee that doing one now would generate the same sort of capital appreciation as the above portfolio, but purely for academic interest, these are the stocks that would make the cut were we creating the Dogs of the Footsie portfolio now:

Rio Tinto, Persimmon, Anglo American, Royal Mail, Marks & Spencer, BT, Glencore, Imperial Brands, National Grid and J. Sainsbury.

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