With the Dow 10 strategy, you are fully invested at all times. The stocks to buy are the ones everyone else is selling. The strategy represents a systematic way to invest in established companies whose prices are depressed for one reason or another and may be out of favor with investors. The stock prices of the ten companies have either fallen or are trailing in the broader market, so their yields are high in relation to their stock price. By virtue of their size and strength, however, companies in the DJIA tend to be survivors whose typically strong balance sheets allow them to ride out temporary setbacks.
Dividends can be an important part of total return.
The high dividend yields of the Dow 10 stocks can offer a good foundation. Because of the foundation provided by dividends, the strategy has worked particularly well in bear markets. Because of these principles, investing in the Dow 10 can offer more opportunity than risk, particularly if the strategy is followed for at least three to five years, as some financial consultants recommend. But it does require some discipline no matter what happens in the equity market, or to individual companies, the investor must hold all ten stocks for the full year. And, even if a company's performance is rewarding, or its outlook good, the investor must sell a stock when the year is up if it no longer meets the high-yield criteria.