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Home Glossary
InvestingStocksBondsCryptoPersonal FinanceFundamental AnalysisTechnical AnalysisTradingBankingTaxes
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Canine

Dog
BusinessBusiness Jargon

What Is a Dog?

In business, a canine (otherwise called a "pet") is one of the four categories or quadrants of the BCG Growth-Share matrix developed by Boston Consulting Group during the 1970s to oversee different business units inside a company. A canine is a business unit that has a small market share in a mature industry. A canine hence neither produces the strong cash flow nor requires the heavy investment that a cash cow or star unit would (two different categories in the BCG matrix). A canine measures low on both market share and growth.

For investors, "Dogs of the Dow" is an investment strategy that endeavors to beat the Dow Jones Industrial Average (DJIA) every year by inclining portfolios in the direction of high-yield investments. The overall concept is to designate money to the 10 highest dividend-yielding, blue-chip stocks among the 30 parts of the DJIA.

Grasping Dogs

Since a canine ties up significant capital and resources that can be all the more successfully sent somewhere else in the company, it is a coherent candidate available to be purchased or divestment.

Notwithstanding, a canine may some of the time play a more extensive part to play inside a company. For example, it might offer products that supplement those offered by other business units in the company, or it could be a portal that gets customers keen on the company's different products. In such cases, management would need to choose whether the [synergies](/cooperative energy) and elusive gains offered by this business unit justify the capital tied up in it.

On the off chance that the unit's long-term possibilities are dreary, the best course of action may be to sell or strip the business at the earliest opportunity, since its weakening possibilities would make it harder to sell with time. In the business world, a canine is probably not going to at any point return to its brilliance days as a star or cash cow.

In the majority of cases, since a canine commonly operates in a mature industry, management wouldn't be justified in distributing more capital to it in a bid to extend market share.

Special Considerations

As per the BCG matrix, companies ought to liquidate, strip, or reposition these "pets." In reality, however, such a move probably won't seem OK since dogs may as of now have such low value and could occupy management during the sale cycle. Regularly, their weak competitive position leaves them unequipped for being "gathered" either — assuming that the investment is diminished, they may just vanish.

All things considered, consider setting them up to operate with insignificant resource drain on the remainder of the portfolio, as the best individuals and all discretionary resources are redirected to additional appealing businesses. Over the long haul, they will end up being a diminishing portion of the portfolio.

Dogs of the Dow

With regards to investments, a "canine" may allude to a stock that is a canine one year can ultimately turn into a star, assuming that management executes a turnaround that works on the stock's profitability and possibilities. This is the fundamental reason behind the "Dogs of the Dow" strategy, which purchases the highest dividend yielders in the DJIA in view of the thought that these stocks can outperform the index over the long haul as they work on their operating performance and financial outcomes.

However not a completely new concept, in 1991, this strategy previously turned into a famous installation with the publication of Michael B. O'Higgins' book, Beating the Dow, where he additionally authored the name "Dogs of the Dow."

Highlights

  • In the investment world, a canine stock one year might turn into a cash cow one more year on the off chance that a company works on its profitability and profile.
  • There are four categories in the BCG growth-share matrix; the canine is one of them and the cash cow is another.
  • The Dogs of the Dow strategy endeavors to amplify the yield of investments by buying the highest-delivering dividend stocks accessible from the DJIA every year.
  • The term canine may likewise allude to a stock that is a persistent failing to meet expectations stock, and subsequently, a drag on the performance of a portfolio.