Dividend Investing: A Value Tilt in Disguise?

In today's near-zero interest rate environment, dividend investing is back in fashion. The popularity of stocks that offer investors generous dividend distributions has only been heightened by their recent performance. From Jan 1, 2011, to Sep 30, 2012, the FTSE High Dividend Yield Index of US...

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Bibliographic Details
Published in:Journal of Financial Planning 2013-04, Vol.26 (4), p.52
Main Author: Fisher, Gregg S
Format: Article
Language:English
Subjects:
Dividend distributions
Dividends
Indexes
Interest rates
Securities markets
Stocks
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Summary:In today's near-zero interest rate environment, dividend investing is back in fashion. The popularity of stocks that offer investors generous dividend distributions has only been heightened by their recent performance. From Jan 1, 2011, to Sep 30, 2012, the FTSE High Dividend Yield Index of US stocks returned 26% compared to just 19% for the S&P 500 Index. In seeking to better understand the outperformance of high-dividend-yielding stocks relative to the broader equity market, this paper dissects their return patterns and examines returns over a period of more than 30 years through the lens of risk factors. Results suggest that it was actually the value factor that is inherent in most high-dividend-yielding stocks that was responsible for the outperformance of these stocks over the period studied. The yield factor associated with high-dividend-yielding stocks actually detracted from performance.
ISSN:1040-3981