Then buy the next four stocks in equal dollar amounts. We already know that the 10 highest yielding Dow stocks outperform the Dow. But the 10 highest yielders don't all do equally well. Some are duds, in fact. The secret is using the square root of price.
Beta is a measure of volatility.
A stock with a high beta tends to move more rapidly and to greater extremes than the market as a whole. Of course, beta is based on long-term averages, and no stock follows the rules exactly. Still, stocks with higher betas tend to be more lively, and stocks with betas lower than 1 tend to move more sluggishly. By selecting stocks with high yields, we are selecting stocks whose price movement is more likely to be up . Therefore, by selecting for high beta, the magnitude of the upward movement is increased.