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       ✓ The Dogs of the Dow: In 1991, Michael O’Higgins proposed an investment strategy called The Dogs of the Dow based on the fact that a dividend stock’s yield rises whenever its share price drops. Proponents of this theory believe that the components of the Dow Jones Industrial Average with the highest dividend yields have the greatest potential for capital appreciation in the coming year.

       ✓ The Geraldine Weiss Approach: Geraldine Weiss, editor of Investment Quality Trends (www.iqtrends.com), is a leading expert on dividend investing who promotes buying high-yield blue-chip stocks. The overall strategy is to buy high and sell low – that is, buy when dividend yields are at the historic highs and sell when the dividend yields hit historic lows. Sticking with blue-chips helps avoid financially troubled companies.

       ✓ Relative Dividend Yield: Developed by money manager Anthony Spare, this approach rates stocks by comparing a company’s dividend yield to that of the average yield of the S&P 500. In his book Relative Dividend Yield: Common Stock Investing for Income and Appreciation, 2nd Edition (Wiley), Spare recommends giving careful consideration to stocks with a dividend yield that’s more than double the average on the S&P 500.

       ✓ Dividend Achievers: Dividend Achievers identifies companies that have an outstanding track record for increasing dividend payments every year. To make it on the U.S. Broad Dividend Achievers Index, U.S. companies must have at least ten consecutive years of increasing regular dividends, be listed on the NYSE or NASDAQ, and have a minimum average daily cash volume of $500,000.

       ✓ Education and research: Knowledge is power, and by reading this book, you’re already engaged in the pursuit of the requisite insight and know-how.

       ✓ Dollar cost averaging: Dollar cost averaging is investing a fixed amount of money at regular intervals (such as monthly) toward the purchase of a particular investment. With dollar cost averaging, sometimes you pay more for the investment and sometimes less. This strategy reduces your chance of paying a premium for a large number of shares and then losing a huge amount of money when the price drops.

       ✓ Diversification: Don’t put all of your golden goose eggs in one basket by investing heavily in any one company, sector, or type of investment. By diversifying your portfolio with stocks, bonds, and cash, you not only spread the wealth but also lower your risk profile.

       ✓ Strategic timing: No, I’m not recommending that you try to time the market. What I do recommend is that you match your investment strategy to your time frame. Be aware of how many years you have before you need this money. The less time you have, the more conservative your investments should be. As you get older, consider allocating a higher percentage of your portfolio to safer investments, such as bonds, to protect your capital.

       ✓ Direct: You may be able to purchase shares directly from the company. For more about direct purchase programs, see Chapter 6.

       ✓ Broker: Brokers buy and sell shares on commission. In other words, they execute trades on your behalf. A full-service broker charges more but may offer some valuable insight and advice. A discount broker merely processes your order. If you’re a do-it-yourselfer, this route is the way to go.

       ✓ Investment advisor: A registered investment advisor is a step above a broker. An advisor can help you build and manage a portfolio to meet your financial goals, recommend stocks and other investments to consider, and meet with you regularly to make adjustments.