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Trading

Dogs-of-the-Dow

Published by Gbaf News

Posted on March 8, 2013

2 min read

· Last updated: September 24, 2024

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Dogs-of-the-Dow system seems to be a new, unheard of and weird for those who aren’t familiar with foreign currency trading. However, it’s a widely known system in the stock and trading business. There are some stock brokers who have earned money with this system. They feel that it’s a safe way to let your money grow slowly but continuously. It is said that the Dogs-of-the-Dow system can provide a better percentage than the index.

Let’s take a look at how the Dogs-of-the-Dow system works. In early January you take a look at all the companies that give you the highest dividend payment. You make a folder of several companies added together and decide what percentage you will spend on each company. You purchase stocks of each company in the amount you have decided to invest and then wait. At the end of the year you’ll take note of the balances and see what profits have been earned if any? This system works best for those that do not want to participate in active trading. It allows for investment in well researched companies for long term financial investment versus immediate income.

There are many other systems available if you want to be more active in the market and see more immediate returns on your investments. You may want to explore other day trading options or currency trading on the foreign exchange market. These forms of trading are seen as more high risk trades but may lead to investment income earlier then the Dogs-of-the Dow system. Either way, be sure to explore your options, research the market and companies you are looking at and only invest funds you can afford to lose.

 

 

 

Key Takeaways

  • Dogs‑of‑the‑Dow selects the 10 Dow Jones stocks with the highest dividend yields each year.
  • It’s a low‑effort, value‑oriented, dividend strategy designed for long‑term, passive investment.
  • Historically it has often matched or slightly outperformed the Dow over extended periods.
  • Performance can vary annually and may underperform during market extremes or after costs.

References

Frequently Asked Questions

How do you implement the Dogs‑of‑the‑Dow strategy?
At the start of each year, identify the 10 Dow Jones Industrial Average stocks with the highest dividend yields, invest equal amounts in each, hold for the year, then rebalance next year.
Why might this strategy outperform?
High dividend yield may signal price dips in solid blue‑chip companies, so investing in them can capture income and potential price recovery over time.
What are the risks or downsides?
It may underperform during bubbles or crashes, offers no guarantee, and gains may be reduced by transaction costs and taxes.

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