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The Dividend Investor: A practical guide to building a share portfolio designed to maximise income by Rodney Hobson

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Chapter 23. Dogs Might Fly

We can use stock filters to follow a strategy known as the Dogs of the Dow. This was the nickname given to an investment idea devised by Michael O’Higgins who attempted to identify undervalued, high-yielding stocks that were relatively risk free. It may sound too good to be true but there is much to commend his notion.

O’Higgins identified the ten stocks in the Dow Jones Industrial Average (DJIA) with the highest prospective yields and suggested investing equal amounts of money in the five with the lowest share prices. He reckoned that the market tends to overdo the gloom in such situations and there are therefore good prospects of recovery in the share price.

O’Higgins set an arbitrary time limit of one year, during ...

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