Having trouble figuring out what to buy this year? Tired of waiting for me to narrow down the list of stocks I want to hold in my 2012 buy/hold list? Consider taking a look at the "Dogs of the Dow," a New Year's stock picking strategy that's become pretty popular in recent years. I like it as a starting point because you get to steal someone else's homework. The work of figuring out a list of 30 giant global stable companies has already been done for you–it's called the Dow Jones Industrial Average. When people tell me they want to start picking stocks I say, choose your favorite company in the Dow and buy it with a small piece of your portfolio. Of course, success is never guaranteed (just look at recent disasters like Citigroup (C), Bank of America (BAC) and General Motors (GM)) but the analysts do generally throw out companies as they start to look risky.
Analysts like Kapitall Wire's Becca Lipman take the process one step further and pick out the ten highest yielding of the DJIA. These stocks have a tendency to outperform the market–see her attached article and list.
I crossed Becca's list with my personal holdings, and it turns out I own seven of the ten stocks. I plan to sell AT&T (T) and Johnson & Johnson (JNJ) into any price increases. But I am very happy holding the other five.
I own, T, MRK, PFE, INTC, JNJ, PG, GE. I am likely to sell (or hedge with options) T and JNJ in the next few weeks. I am likely to buy more PG, MRK, GE as part of my 2012 portfolio. I do not own KFT, VZ or DU.
David Neubert is co-founder and shareholder of Kapitall, Inc., the sole owner of Kapitall Generation, LLC (“KapGen”), an SEC registered broker-dealer and FINRA member. Mr. Neubert is not an associated person of KapGen or any other broker-dealer and, other than his indirect relationship described above, he has no control or affiliation with KapGen.
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