Dogs of the Dow Strategy

Dogs of the Dow - Dogs of the Dow Strategy

Dogs of the Dow

The dogs of the dow investing strategy is simple and straightforward, and it usually beats the Market.

Let’s get into the basics of the Dogs of the Dow Strategy:

At the beginning of each new year you look at all 30 stocks contained in the Dow Jones. From this list you select the 10 highest yielding stocks. Finally, you simply invest an equal dollar amount in each of these 10 stocks. That’s it, simply hold these stocks through the year and the dividends and growth typically beat the average market return! You can easily implement the Dogs of the Dow strategy to a portion of your portfolio each year.

Benjamin Graham’s Dogs of the Dow Strategy:

Benjamin Graham wrote the Intelligent Investor, one of Warren Buffett’s favorite investing books. In it he explains his variation of the Dogs of the Dow Strategy. He shows that selecting the 10 stocks from the Dow with the Lowest P/E multipliers (ratios) each year they will on average return double what the Dow returns itself. This is very similar to the famous dogs of the Dow strategy but utilizes fundamentals to find the cheapest stocks in the Dow. (YP Investors offers a Buffett Fundamentals Tool displaying these key metrics.)

Improving Dogs of the Dow with Technical Analysis:

This is a very simple investing strategy and allows you to have a portion of your portfolio be managed only once a year! Alternatively, if you spend a little extra time you can improve on the returns. The long term trend of a stock is key to the predicting the direction it will go. Technical analysis and point and figure charting show us this long term trend. You can see the tend of a stock using our Stock Selector Tool or Point and Figure Charting Tools.

The big improvement to the Dogs of the Dow strategy is to only select about 10 stocks that are in positive trends and have either highest yields or the lowest P/E ratios. You can easily do this in less than 2 minutes using the YP InvestorsĀ Stock Selector Tool. This addition should help you get even better returns because you are selecting positive long term trending stocks. This means their prices are likely to rise!

Good luck on your investments and continue to grow your wealth!

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