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Unformatted text preview: total market return was
between 0 and 10%). The results are summarized in Figure 2.2: 20 Figure 2.2: Are high dividend yield stocks better defensive investments? 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% -15.00%
Highest dividend yield stocks Bear Lowest Dividend Yield Stocks Data from French. These are the average annual returns on high dividend yield and low dividend
yield stocks in bull market years (stocks up more than 10%), neutral market years (stocks up
between 0 and 10%) and bear market years (stocks down for the year). There is little evidence for the claim that high dividend stocks are better defensive
investments, especially in bear markets. Between 1927 and 2001, high dividend yield stocks
actually delivered more negative total returns than low dividend yield stocks during bear
The Dividend Dogs
An extreme version of a high dividend portfolio is the strategy of investing in the
“Dow Dogs”, the ten stocks with the highest dividend yields in the Dow 30. Proponents of
this strategy claim that they generate high returns from it, but they base this claim on a
comparison of the returns that you would have made on the strategy to what you would ha...
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- Spring '11