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How to reinvest dividends? A new approach to the "Dogs of Dow" strategy

|Includes: McDonald's Corporation (MCD), T
We have decided to upgrade one of the DOW dividend Investment Strategy. We hope this improvement will help to achieve better return on investments. We have chosen to “improve” strategy “Dogs of the Dow”.
The basis of our new portfolio “Portfolio #12 -DDD” is “Portfolio #1 - Dogs of the Dow”.

Everyone knows that the dividends must be reinvested back. Usually we have reinvest dividends into stocks of the same company.

Is there a better way to reinvest dividends? We think so.

We have decided to reinvest dividends into companies with the best rates of profitability in this portfolio. We have chosen only one criterion – profitability of the retained earnings.

Estimation is very easy: all net profit minus all dividends during 10 years. Second step: (EPS’10-EPS’01)/(net profit minus all dividends during 10 years). The companies with the biggest profitability are our stocks for reinvesting.

AT&T Inc – 27.91%;
McDonald's Corporation – 24.49%;
Chevron Corp – 15.09%.

So, we will divide every dollar of dividends into the three parts and will reinvest dividends into the stocks of TMCD and CVX.
We launched portfolio #12 –DDD on April 21          
Portfolio #12 –DDD – 2.16%.

DJIA – 2.44%
SP500 – 1.96%.