I don’t usually talk about investing on this site but hope you can humor as I’m just thinking this through as the new year gets rolling.
Last January I decided to put some money into a modified Dogs of the Dow strategy (basically, it involves buying the 10 stocks with highest dividend yields in the Dow – you can see all 30 of the Dow components here). I previously had been holding two of the stocks (Intel & Verizon) and decided to buy five more (AT&T, Kraft, Johnson & Johnson, Merck & Pfizer). I didn’t buy the three stocks with the lowest dividend yields (DuPont, McDonald’s and Chevron – McDonald’s went on to be the top Dow stock of 2011, up 31%). The seven stocks I did go into were up (for me) ~16% for the year (not counting dividends paid) which was decent compared to the Dow’s overall 2011 return of ~5% and the S&P500′s 0%.
This year I’ve decided to repeat the exercise, reducing my relatively overweight positions in Intel & Verizon and moving into DuPont and the two new members of the Dogs of the Dow, GE and Procter & Gamble. The whole plan is way less diversified than an index fund but in theory somewhat safer than blowing everything back into Apple.
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