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Current DateTime: 09:05:48 09 Feb 2012
LinksList Documentid: 23920732
Expiration DateTime: 2/9/2012 9:06:52 PM

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Current DateTime: 09:05:48 09 Feb 2012
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Current DateTime: 09:05:48 09 Feb 2012
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ABOUT BY THE NUMBERS

Our market specialists dig deep into Wall Street’s daily metrics, crunching the numbers to help you become smarter about the market so that you can make better investment decisions. By The Numbers details the daily drama, the winners and losers, how the day stacks up historically, and how the numbers can offer a glimpse of the future.
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Current DateTime: 09:05:48 09 Feb 2012
LinksList Documentid: 30111251
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"Dogs of the Dow" or "High Yield 10", is a popular investment strategy that defines a portfolio by equal dollar value investments into the 10 highest yielding Dow stocks at the end of a year.  The theory behind the strategy is that dividends are more stable than stock prices and therefore, a high dividend yield reflects a stock that is near the bottom of its business cycle and has a beaten down share price that is poised for a rebound.

There have been variations of the strategy that include proportionate investments in the Dogs weighted by share price.   Other permutations suggest dropping the lowest price / highest yielding Dog out of concern that the company may be in deep trouble.  Of course, any company could change its dividend to reflect a change in its business fundamentals.  Citigroup [C  Loading...      ()   ], for example, would have a yield of over 9.5% based on trailing 12 months dividends.  However, Citi announced in November that it would be cutting its dividend to $.01 per share, significantly reducing its yield and taking it off the list below for the Dogs of 2009.

Note that the strategy does not always work.  Last year's Dogs are down an average of over 41% for 2008 while the Dow was down 34%.  Given all of the above, here's a look at yields for the Dow stocks going into 2009.  The top 10 would be your Dogs of the Dow.

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