2007-01-11 01:19:43 · 5 answers · asked by Anonymous in Business & Finance ➔ Investing
It's a high risk system with a possible high return. It's when you invest in 'dog' companies (ie smelly, flee ridden ones that seem to have little prospects) at a low price with the hope that they increase substantially in value over time.
To be fair any system of investing the in the stock market has potential to be as good as the last, it depends on your level of risk adversity and how willing to lose your money you are
2007-01-11 01:33:07 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Yes
Simply rank the 30 stocks of the Dow by their dividend % and invest in the ones with the highest dividend %.
Since the dividend payout % is effected by the movement of the stock (as the share price decreases the dividend % increases) the highest dividend stocks are quite often the ones that may have been declining in value (that's why they are called dogs).
The theory is that the stocks might rebound over the next few months and you'll profit from this rebound. One risk to consider with this strategy is that there might be a good reason behind the decline in the stock and the price continues to go down.
2007-01-11 14:44:39 · answer #2 · answered by derek 4 · 0⤊ 0⤋
Here is a link where you can read more about it. It looks like this strategy has been outperforming the market.
It involves investing in stocks with high dividends. It is called "Dogs of the Dow" because firms that do not do well but don't cut their dividends will have a high dividend yield. However, this is a bit of a misnomer -- as several firms that are very profitable have no need to plow money back into their operations and have high yields for other reasons. For some company, it is to funnel cash back into a holding company. For others it is to signal their strength.
2007-01-11 12:44:14 · answer #3 · answered by Ranto 7 · 0⤊ 0⤋
"Dogs of the Dow" did very well the first few years after it was published. It also did extremely well last year. In between, it pretty much underperformed. There is a website that has a lot of information about and data related to the method:
http://www.dogsofthedow.com/
2007-01-11 19:51:19 · answer #4 · answered by Randy H 4 · 0⤊ 0⤋
Not "high risk" as they are Dow 30 stocks & strategy has shown some decent numbers. Not something I would bother with.
2007-01-11 10:51:04 · answer #5 · answered by vegas_iwish 5 · 0⤊ 0⤋