Topic: How To Invest

Q: Pat, may I have your view of the ALPS Sector Dividend Dogs ETF? If one were considering a “Dogs of the Dow” approach, which I suppose is more common at this late in the year, would this be an alternative? Thanks.

Article Excerpt

A: The ALPS Sector Dividend Dogs ETF, $46.58, symbol SDOG on New York (Units outstanding: 23.1 million; Market cap: $1.1 billion;, is an ETF that applies the “Dogs of the Dow” approach on a sector-by-sector basis to the S&P 500. The fund started up on June 29, 2012, and its MER is 0.40%. It yields 4.6%. The Dogs of the Dow approach involves buying the highest-yielding stocks in the Dow Jones Industrial Average. It’s based on the idea that a high dividend yield is an indicator of an undervalued stock. To apply this approach, at the end of each year, you pick the 10 stocks with the highest dividend yields from the 30 stocks that make up the Dow index. You then invest an equal dollar amount in each of these 10 stocks and hold them for one year. You repeat the selection process and re-jig the portfolio at each year-end. In theory, these stocks should outperform the market ( the DJIA…