Many investors rely on a company’s dividend yield as a guide for selecting companies. Read about a...

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Many investors rely on a company’s dividend yield as a guide for selecting companies. Read about a popular approach called "Dogs of the Dow" ( http://www.dogsofthedow.com/www.dogsofthedow.com). Click on "YTD Performance" (or choose “YTD Performance” from the drop-down menu) to compare the approach to the overall Dow Jones Industrial Average. For the current year, are the Dogs of the Dow beating the overall market? Explain your answer. Problem 2: Use the following bond screener to answer the questions below: http://cxa.marketwatch.

David · Accepted Answer

SOLUTON 1: 
Dogs of the Dow is a stock picking technique designed for selecting highest dividend paying 
Dow stocks. The Dogs of the Dow are the 10 of the 30 companies in the Dow Jones Industrial 
Average (DJIA) with the maximum dividend yield. Under this strategy, investor keeps on 
shuffling his portfolio so that it is always equally allocated in each of these 10 stocks.  
Dow Jones Industrial Average is a price weighted average of 30 important stocks trading on New 
York Stock Exchange and NASDAQ. It is considered as oldest and most observed index in the 
world.  
As on 31
st
 December, 2012 the average yield provided by Dogs of the Dow was 4.06%, whereas 
the yield provided by Dow Jones Industrial Index was 2.88%.

Many investors rely on a company’s dividend yield as a guide for selecting companies. Read about a popular approach called "Dogs of the Dow" ( http://www.dogsofthedow.com/www.dogsofthedow.com). Click...

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