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Unformatted text preview: more than the returns on the lowest dividend yield portfolio. During this
period, the lowest returns were earned by the firms in the intermediate dividend yield
classes. Between 1971 and 1990, the lowest dividend yield stocks earned a higher annual
return than the highest dividend yield stocks. Between 1991 and 2001, the advantage shifts
back to higher dividend yield stocks. Over the entire period, higher dividend yield stocks
generate a slightly higher annual return than lower dividend yield stocks. 19 Figure 2.1: Returns on Dividend Yield Classes - 1952 - 2001
Highest dividend yield stocks 20.00% Lowest dividend yield stocks 18.00% Average Annual Return 16.00%
Highest 2 3 4 5 Dividend Yield Class 6 7 8 1991-2001
9 Lowest Data from Ken French at Dartmouth. The stocks were categorized into classes based upon the dividend
yields at the beginning of each year and the annual returns in t he following year were calculated. This
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This note was uploaded on 01/17/2012 for the course ECON 101 taught by Professor Econnorm during the Spring '11 term at Art Institutes Intl. Minnesota.
- Spring '11