Stock Selection Method: O.K., So What Do I Do?
Description
This article is from the How to Start an Investment Program tutorial, author unknown.
Stock Selection Method: O.K., So What Do I Do?
The first step to this very simple method is to get your list of the 30 Dow stocks and identify the ten with the highest annual dividend yield. The yield of a stock is determined by dividing the annual dollar dividend by the stock price. If you misplaced your calculator or don't care to do this exercise, don't worry. The dividend yield for the Dow stocks is provided in most stock page listings. Incidentally, in the case of a tie, the stock with the lower price per share makes the list.
After you have made your list, the next step is to buy these ten highest yielding stocks in equal dollar, not share, amounts. For example, if you were investing $10 thousand dollars total, you would invest $1 thousand dollars in each stock. To complete this strategy requires that you hold each stock for one year. When the year is up, you will need to do the math again or check the newspapers to update the top ten highest yielding stocks. If a stock or stocks is no longer among the group, it must be sold and replaced with the newest high yielders.
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