This is a variation of the Dogs of the Dow Strategy and apparently was developed by Meb Faber. Instead of looking only at dividends, the investor looks at dividends and net stock buy backs. Faber’s data say that the strategy has a better return than the Dogs strategy and also has less risk. Faber also has done research that says investors shouldn’t prefer dividend or high yield stocks.
Here’s where it gets even more interesting. The Cash Cows strategy also has the cheapest valuations (median) across all variables except P/E ratio (and then it only nearly misses.
So a much higher total yield, and lower valuations. What’s not to like?