Contrarians' Day: Unleashing the Dow Dogs
If everyone else jumped off a bridge, would you?
When it comes to investing, the answer is probably yes. But there's a perfectly good antidote to buying high and selling low, and it's most likely something your mother never told you: contrarian investing.
Contrarian investing is a simple way to benefit from investors' tendency to be most optimistic when the market is peaking and most pessimistic when the market is bottoming. In his seminal
Of course, contrarian investing means different things. For some, it means buying out-of-favor stocks. For others, it means running like hell from an overvalued market. Today's Financial Education column will discuss a more moderate contrarian approach: The Dow 10 strategy, also known as the Dogs of the Dow.The strategy is simple: Buy equal amounts of the 10 highest-yielding stocks among the 30 components of the Dow Jones Industrial Average and hold them for a year. At the end of each year, rebalance the portfolio to reflect the new top-10 highest-yielding Dow components. Among the Dow 10 currently: Philip Morris (MO), SBC Communications (SBC) and J.P. Morgan Chase (JPM).
|The Dogs of the Dow
These 10 stocks currently have the highest yields among the Dow industrials.
|Stock Yield||on 6/13/03|
|Eastman Kodak (EK)||5.84%|
|General Motors (GM)||5.52%|
|SBC Communications (SBC)||4.46%|
|J.P. Morgan Chase (JPM)||3.92%|
|International Paper (IP)||2.64%|
*Yield as of June 13.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV