Long term investing is an excellent way for more conservative people to make great money. While I much prefer making my money quickly and in a “high-risk = high reward” fashion, long term investing is great for people who are older or people who are more comfortable with safer investments.
The difficult part of long term investing is picking the right stock or group of stocks to invest in.
I just came across a very cool investing strategy that seems like an excellent option for investors who want steady income from their long-term investments via a combination of steady stock price increases and dividend payments.
The strategy is called Dogs of the Dow. It’s easy to comprehend and even simpler to execute.
Q: What is the strategy for Dogs of the Dow?
A: On January 1st, buy the previous years Dow’s top 10 highest-yielding stocks. Collect the dividends. Then, 366 days later, sell those top 10 Dow yielders and buy the top 10 Dow yielders for the next year.
Q: What is a dividend yield?
The dividend yield is a % that equates to the amount of dividend payment dollars you will receive if you own a dividend-paying stock.
In 2011, all the stocks in the Dow together only rose 8.4%. However, the Dogs rose 16.7% including dividends. That’s almost double the Dow all together.
Q: Is the Dogs of the Dow a good strategy for 2013?
A: Since taxes on dividends are staying at 15% for most people, The Dogs of the Dow looks like an excellent strategy to play.
Who are The Dow Dogs of 2013?
|Company||Stock Symbol||2012 Yield|
|Johnson & Johnson||JNJ||3.49%|
If you’d like to purchase fewer than 10 stocks, you can buy the Small Dogs of the Dow, aka the “Puppies of the Dow,” which is the top 5 dogs. According to www.dogsofthedow.com/dogsteps.htm:
“Investing in puppies of the Dow would have resulted in a 20.9% average annual return since 1973!”
That’s not a bad return for a conservative, long-term approach.
Many Happy Returns,