Reese Searches for “Dogs” North of the Border

In his latest article for Canada’s Globe and Mail, Validea CEO John Reese takes a look at the “Dogs of the TSX”.

Noting the historical success of the well-known “Dogs of the Dow” strategy — in which one buys the ten highest-yielding stocks in the Dow Jones Industrial Average, and rebalances the portfolio once a year — Reese looks at the ten highest-yielding issues in Canada’s benchmark S&P/TSX 60 index.

But Reese cautions against blindly buying up “dogs” of any index. “That’s because, for all of its long-term success, the Dogs theory has some serious limitations — namely, its reliance on a single variable,” Reese says. “Throughout my years of researching history’s best investment strategies, I’ve found that the most successful approaches always examine more than one variable; usually, they look at four, five, six, or more.”

With that in mind, Reese looks at which of the TSX dogs get approval from his Guru Strategies, fundamental approaches that are each based on the strategy of a different Wall Street great. He finds several that pass his James O’Shaughnessy-inspired model, including Sun Life Financial. To read the full article and see the other stocks, click here.