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Do Dividends Matter? Maybe Not!
Posted By James Bianco On October 3, 2010 @ 9:30 am In Dividends,Think Tank | Comments Disabled
In 2010, dividend oriented strategies have offered the strongest and most consistent returns despite the “risk-on / risk-off” nature of the market, and dividend yield and dividend growth are strategy leaders in the year to date. However, our work suggests we’re still in the early stages of building interest, given that dividend yield still remains a somewhat underutilized investment theme. Fund manager holdings show that Utilities, Staples and Telecom Services – sectors with the most attractive yield – are the most hated sectors, and have been for quite some time.
The table below breaks down the performance of the S&P 500 stocks by dividend yield:
What we found is rather surprising:
When the market is rallying (through April 23), the more speculative non-dividend and lower dividend yielding stocks outperform the more conservative higher dividend yielding stocks. When the market is moving sideways-to-lower (since April 23), higher dividend yielding stocks outperform.
This is not new and not unique to this environment. Instead this is fairly typical market action. It suggests the opinion that dividend yielding stocks present a unique opportunity is not supported by market returns.
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2010/10/do-dividends-matter-maybe-not/
URLs in this post:
 Here’s Why You Should Care about Dividends: ‘Bladder Theory’: http://blogs.wsj.com/marketbeat/2010/09/29/heres-why-you-should-care-about-dividends-bladder-theory/
 BofA Quant: Dividends Strongest Performing Theme This Year: http://blogs.wsj.com/marketbeat/2010/09/29/bofa-quant-dividends-strongest-performing-theme-this-year/
 Image: http://www.ritholtz.com/blog/wp-content/uploads/2010/10/div0929.gif
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