Dogs of the Dow

The 10 stocks of the 30 on the Dow Jones Industrial Average with the most depressed prices and consequently the highest yields. The investor buying these stocks speculates that they will bounce back over a one-year period.

Dogs of the Dow

1. The 10 stocks (of 30) on the Dow Jones Industrial Average with the lowest prices and consequently the highest yields.

2. An investment strategy in which one buys the dogs of the Dow on the first of the calendar year and sell them exactly one year later. Theoretically, the extra risk involved in this strategy gives an investor a higher return than buying all 30 stocks on the DJIA.

dogs of the Dow

The investment strategy of purchasing the ten stocks in the Dow Jones Industrial Average that offer the highest current dividend yield. The ten-stock portfolio is continuously rebalanced as stock prices and dividends change. The theory is that Dow stocks offering the highest dividend yield are solid investments that are temporarily undervalued.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Dogs of the Dow.

If you follow a Dogs of the Dow investment strategy, you buy the ten highest-yielding stocks in the Dow Jones Industrial Average (DJIA) on the first of the year and hold them for a year.

According to this theory, the dogs will, over the year, produce a total return, or combination of dividends plus price appreciation, that's higher than the return on the DJIA as a whole. The increasing price is the result of demand for the high-yielding stock.

On the anniversary of your purchase, the stocks are no longer dogs because their higher prices reduce their current yield even if the dividend remains the same. So you sell them and buy the next batch of dogs.

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References in periodicals archive

Among their topics are the influence of macroeconomic factors on stock price: the case of real estate and property companies, the existence of price pressures surrounding annual changes in the "Dogs of the Dow" portfolio, the value of corporate voting rights: valuation of loyalty voting rights and empirical evidence from France and Italy, the microfinance sector in emerging capital markets: the Peruvian financial entity Caja Municipal de Huancayo, humanizing finance by hedging property values, and insider or outsider chief executive officers: choosing wisely in different circumstances.

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