Dividends4Life: Dow Dogs Doggy For Picking High-Yield Stocks

Picking high-dividend stocks is not as simple or straightforward as it initially appears. You might think that you should just pick the stocks with the highest yields. Surprisingly, that turns out to be an inferior approach. Take the so-called Dogs of the Dow strategy, which is perhaps the best-known approach among the retail investment public for picking high-yield stocks. The strategy took the investment world by storm in the early and mid-1990s, on the strength of both its simplicity and excellent long-term track record -- at least when backtested.

A funny thing happened on the way to the bank, however: In real time since then, the strategy has failed to keep up with a simple index fund. For example, the strategy has beaten the Dow itself in just 5 of the last 16 calendar years. And those five winning years have not made up for the losses incurred in the 11 losing years. The handful of advisory services tracked by the HFD that were devoted to the Dogs of the Dow either went out of business or changed their focus.

Source: SmartMoney

Related Articles:
- Why Dividends Matter
- 2011 Was A Great Year For Dividend Stocks
- Utilities Stock Funds Were 2011's Bright Star
- 2011 Dividend Increases Nearly Doubled, and 7 Dividend Stocks that Led the Way
- 6 Dividend Stocks For The New Year

Click here to have future posts delivered to you for free!



Post a Comment

Note: Only a member of this blog may post a comment.


Popular Posts Last 30 Days