It’s the start of a new year and we’re coming off the worst year in the market in a decade. With that in mind, I’m sure there are investors out there taking a look at their brokerage statements and considering alternative strategies for 2019.

Well, here’s one for you to consider.

It’s a strategy with a proven ability to beat the markets over the long-term. It’s also one that I’m personally interested in as an income-oriented investor. It’s simple, yet effective. I’m talking about the Dogs of the Dow strategy.

To follow the Dogs of the Dow strategy, all an investor does is pick the 10 highest yielding members of the Dow Jones Industrial Average and build an evenly weighted portfolio with them at the start of each year. At the end of the year, sell any stocks that no longer meet the criteria and repeat the process.

Steady Gait

There are several benefits that make this a successful investing strategy. The elegant simplicity of the strategy helps to combat the typical flaws in human nature that lead to sub-par returns. The strategy takes any guessing games and market timing out of the equation.

By having an established year-long holding period, you won’t fall into the trap of short-term thinking by worrying about quarter-to-quarter results. You also don’t have to worry about being caught up in all of the headlines and potentially worrisome rhetoric surrounding the markets.

Also, by investing in Dow stocks, you’re only owning blue-chip companies. Dow components should theoretically be market leaders with strong competitive positions, wide moats, attractive cash flows, and well-known brands. Sure, you might end up with 10 holdings that seem boring, but oftentimes, it’s the boring companies that do best in the markets.

And not only are you investing in blue chips, but you’re likely investing in value stocks as well. All of the Dow components pay a dividend. So, when looking at the highest 10 years (out of the 30 stocks in the Dow) you’re usually looking at the relative underperformers from the prior year.

Handling Emotions

It’s axiomatic that buying low and selling high is a good way to make money in the markets. However, this is a difficult practice to put into place because of the fear associated with buying beaten down names and the greed of wanting to chase momentum.

Fear and greed lead to irrational mistakes, yet if you stay disciplined to the Dogs strategy there is no room for these emotions to cloud your decision making, because the decisions are being made for you.

Furthermore, since there is the high yield component of the Dogs of the Dow strategy, you’re only owning stocks with generous management teams. Not only will these high yields line your pockets with cash throughout the year, but they should help to set a floor under your holdings.

When following the Dogs of the Dow strategy, you don’t have to worry about the day-to-day movement of your holdings. The market has a habit of reverting to the mean in terms of fair value and large-cap blue chip companies rarely experience the sort of volatility that would change their fair value calculations much from year to year. You simply have to trust in value investing principles and sit back and collect/re-invest the dividends you receive.

Remember, it’s a proven process. Trust it.

Best of Breed

So, if this seems appealing to you, here are the 10 stocks that Dogs of the Dow followers will be purchasing in 2019.

Obviously, there aren’t any guarantees when it comes to market returns. The Dogs Strategy doesn’t always perform well. We have witnessed a shift from growth into value late in 2018 and if that trend continues into the new year, investors following this strategy could be well positioned. Only time will tell, though you could do much worse for yourself than buying and holding beaten down blue chips with high dividend yields.

Another source of time-proven investment strategies is my colleague Jim Fink, who runs the premium service Velocity Trader. Now’s a particularly good time to heed his advice.

Jim is making his followers a “bet” that he can deliver 24 triple-digit winning trades over the next 12 months. If not, he’ll hand you $1,950. So far, every time Jim has made this bet, he has delivered with winners. Want to know more? Click here for details.