How to Analyze Dogs of the Dow Stocks for Investing
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Dogs of the Dow investing strategy is one of the most popular and well known stock selection strategies. It has been around for more than two decades after it was first introduced by Michael Higgins in the early ‘90s. The strategy has continued to be in use as it gives leveraged returns when compared to other traditional stock strategies. Before one chooses to invest in the Dogs of the Dow, it is important to understand what it involves, what kind of stocks are part of this portfolio, and how to analyze and review these stocks before deciding if they would be the right fit for an investor’s portfolio.
What is the Dogs of the Dow Strategy?
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The Dogs of the Dow investing strategy is a value investing approach that relies on selecting 10 high dividend paying stocks of Dow Jones Industrial Average (DJIA) and holding them for a year. The DJIA is an index of 30 blue-chip stocks traded on the New York Stock Exchange and is considered a critical benchmark for US stock markets. Choosing the Dogs of the Dow stocks for investment requires a review of the stocks’ dividend yields, and performance over the course of the year.
How to Select the Right Stocks for Investment?
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The first step to selecting the Dogs of the Dow stocks for investment is to identify the components of the Dow. Generally, the stocks that make up the index tend to comprise of the largest US companies with strong balance sheets and a long history of success in the stock market. The next step is to compare the dividend yields of the stocks in the index and shortlist the stocks with highest yields. This shortlist of stocks will form the base of the Dogs of the Dow strategy.
Carrying out Analysis and Review
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Once the stocks are identified, the next step is to carry out a detailed analysis and review of these stocks. A value investor looks at various factors while reviewing the stock and trying to decide if it’s worth investing in. This includes reviewing the company’s financials, management, competition, and other industry trends.
Besides the company itself, factors like macroeconomic factors may also influence the stock’s performance. For example, the central bank’s policy decisions, changes in the Fed’s monetary policies, or any large scale geopolitical events can all impact the stock’s performance which can be best understood and sued to decide whether the stock should be added to the Dogs of the Dow portfolio.
Using MarketXLS to Analyze Dogs of the Dow Stocks
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Many investors using the Dogs of the Dow investing strategy find it tedious and laborious to manually review and analyze the stocks before investing. This is especially true during times of extreme market volatility or when large-scale geopolitical events take place.
MarketXLS is a cloud-based stock analytics software that can be a great help in such scenarios. By just subscribing to its software, one can save time and resources while looking for the best stocks as part of their Dogs of the Dow strategy.
MarketXLS provides detailed information and analysis on numerous stocks in the US and global market. As a value investor, one can look at stock metrics like PE ratios, financials, and company rating to decide if it would be a smart pick for their portfolio. Additionally, the software comes with market screening capabilities, allowing users to quickly identify the best stocks, and track their performance over time.
Conclusion
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The Dogs of the Dow strategy is a great investing approach for those looking to ride the momentum of the Dow and make some leveraged profits over the course of a year. To successfully apply this strategy one must have a good understanding of the Dow components, have the ability to review and analyze stocks effectively and efficiently, and also have access to real-time stock metabolism. With the help of MarketXLS, investors can streamline and simplify the process of selecting the right stocks as part of their Dogs of the Dow strategy.
Here are some templates that you can use to create your own models
Search for all Templates here: https://marketxls.com/templates/
