Utilities Will Trump The Dogs Of The Dow In 2012

Thomas Hughes The Dogs of the Dow are hot news right now. Their combined performance is the highlight at the end of this fiscal year. These 10 Dow components returned an average 17% when adjusted for dividend payouts. Pretty nice compared with poor performances from the general market. The Dow (DIA) leads 2011 with a modest 5.5% gain, the S&P (SPY) comes in second with a basically flat year and the Nasdaq (QQQ) finished last with a disappointing 1.8% decline. What is the underlying difference? Dividends. The Dow components average around 3.5% yield, whereas the NASDAQ 100 only average .9%. The S&P 500 average 2%. All 30 Dow components produce dividends, only 80% of the S&P and a meager 44% of the NASDAQ 100 pay. With this in mind it is quite easy to see why the Dow out performed the other major index’s this year. Looking ahead to the next year I expect to see much of the same. US GDP growth is expected to total 1.8% for 2011 with only a slight increase for 2012. Predictions for next year are for 2.3% total US growth. This is actually optimistic. Europe is looking forward to more troubles in 2012…