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Stock Selection Method: Choose From Among the "Dow Dogs"




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This article is from the How to Start an Investment Program tutorial, author unknown.

Stock Selection Method: Choose From Among the "Dow Dogs"

The "Dow Dog" strategy of building a stock portfolio is also known as the Dow Dividend Approach. This theory, popularized by John Downes some twenty years ago, identifies those companies from among the Dow Index whose stock prices have fallen in relation to the dividend that they pay (thereby increasing the yield). To understand this method requires that you first have a knowledge of the stocks that make up the Dow Jones Industrial Average (DJIA).

There are 30 of them and they comprise some of the largest, multinational companies based in America. General Motors, Exxon, Coca-Cola, and Disney are just a few of the well-known names that comprise this index.

Other names that should be familiar to most include Eastman Kodak (maker of dental film, processing chemicals, etc), 3M (impression material, composites, etc.) and Procter and Gamble (ever heard of Crest toothpaste?). To find the names of the other companies, just pick up a copy of the Wall Street Journal or any of the other major financial newspapers. You'll find them listed.

 

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