"The Dogs of the Dow strategy has a long-term history of outperforming the Dow Jones average," notes technical expert Gerald Appel.
In his Systems & Forecasts, he explains, "The theory is that the highest yielding stocks are undervalued and should have the greatest change of appreciating." Here, he reviews the five highest yielders.
"In calculating a formal track record for the strategy, dividend yields are ranked on the last trading day of each year. However, there is no reason why you are limited to ranking stocks only at the end of the year.
"The current market climate appears favorable for using this strategy to garner investment income, since market risk appears below normal and investment income is getting hard to come by.
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