Dogs Of The Dow: Mangy Curs Or An Investor's Best Friends?

The "Dogs of the Dow" theory involves buying equal amounts of the 10 Dow stocks that had the highest dividend-to-price ratio during the previous full year. It has become a popular investing strategy thanks to its simplicity, and for the first three months of 2014, the best of the Dogs have outperformed the S&P 500. But not everyone thinks it's a Best of Breed technique.

Drawbacks Among the Mangy Curs

First, let's clarify this strategy. Plenty of stocks pay dividends -- money you get just for owning them on payout days. If the dividend amounts to a relatively high percentage of the stock price, that's an indicator that the shares may be undervalued -- and thus poised to rise.

This year, the 10 are AT&T (T), Chevron (CVX), Cisco Systems (CSCO), General Electric (GE), Intel (INTC), McDonald's (MCD), Merck (MRK), Microsoft (MSFT), Pfizer (PFE) and Verizon (VZ).

Read the full post at Daily Finance.

Annalisa Kraft has no position in these companies.

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