Updated: February 8, 2017
The classic “Dogs of the Dow” strategy advises buying the 10 highest-yielding Dow Jones Industrial Average stocks, then holding onto them for a year. The idea is that higher yields are a signal of a beaten-up share price – and that because we’re buying a stable blue-chip with a stable customer base, investors will eventually bid the stock back up when the business cycle turns up again.
But we can further improve on this effective yet somewhat “dumb” strategy with a bit of second-level analysis. After all, some of these companies have business models that are actually aging in dog years! And they should be avoided.
Today we’re going to discuss four high paying Dow components. Two are compelling buys, while two should be sold immediately (or even shorted). …