Dividend Studies

The correlation between high-yielding equities and attractive long-term performance has been exhaustively studied over the past few years. Most studies point to a positive impact of dividends on investment returns. We have included a few of the studies on this page as we hope they will provide you with some insight into a time-tested approach to investing in the equity markets.

Dividend Studies
Popular Delusions: Why We Overpay For Excitement
(And The Secret Pleasure Of Being Boring)

Dylan Grice | Apr 2012
High risk offers high excitement, not high returns, because excitement is overvalued. Quality names are boring, and "boring" is undervalued. As SG dividend fetishist Andy Lapthorne says, quality isn’t just for Christmas.

Global Dividend Strategy
Credit Suisse | Jan 2009
In the majority of markets examined, the maximum performance was delivered by companies with high dividend yields and low payout ratios. Stocks with high yields generally outperformed those with low yields in all markets examined.

How Did the 2003 Dividend Tax Cut Affect Stock Prices?
Gene Amromin, Paul Harrison, and Steven Sharpe | Winter 2008
Researchers test the hypothesis that the 2003 dividend tax cut boosted US stock prices and thereby lowered the cost of equity capital. Researchers do not find any imprint of the dividend tax cut news on the value of the aggregate US stock market. On the other hand, high-dividend stocks outperformed low-dividend stocks over the event windows, suggesting that the tax cut may have induced asset reallocation within equity portfolios. Finally, the positive abnormal return on nondividend paying US stocks in 2003 does not appear to be tied to tax cut news.

The Case for a High and Growing Dividend Stock Strategy in Retirement Portfolios
Jack Gardner | 2008
An allocation to high-dividend-paying stocks had a significantly positive impact on both the portfolio's withdrawal rate and its sustainability.

Initial Look at Dividend Slices | Graphs of Dividend Slices
John Walter Russell | 2007–2008
Among dividend paying companies (slices B, C, and D), the regression lines are nearly parallel. Generally, companies with higher dividend payments have higher returns. That is, slice D is consistently better than slice C, which is consistently better than slice B.

The Future for Investors
Jeremy Siegel | 2005
In this chart taken from his book The Future for Investors,, Jeremy Siegel ranks the S&P 500 by dividend yield from 1957 to 2002. The highest yielding quintile (top 20% of S&P 500 based on yield) produced an annualized return of 14.27% vs. an annualized return of 11.18% for the S&P 500 Index.

The Effect of Dividend Initiations on Stock Returns
Yanli Wang | Apr 2005
Consistent with previous studies, the results show that dividend initiations have significantly positive effects on stock returns.

Examining the Income Component of Total Returns
The Brandes Institute | 2004
This paper examines the role of income as a component of total returns in the long-term performance of financial assets.

A Robust Estimation of the Relation Between Stock Returns, Size, Dividend Yield and Payout Ratio
I.D. McManus, O. Gwilym, and S.H. Thomas | Jun 2002
This article examines the relationship between returns and dividends in the context of the UK stock market. It concludes that the payout ratio is an important adjunct to dividend yield in explaining returns.

Corporate Cash Reserves and Acquisitions
Jarrad Harford | Nov 1998
Cash-rich firms are more likely than other firms to attempt acquisitions. Stock-return evidence shows that acquisitions by cash-rich firms are value decreasing.