The only paper I could find is the following:

Dividend Yield Strategy in the British Stock Market 1994-2007 by Brzeszczynski et al. (2008)

It states that a portfolio of stocks with high dividend yields outperforms the broad market most of the time.

Now of course this is only the UK market within a period of a little more than a decade. So I am looking for more papers on this topic covering more markets and longer periods of time.

  • $\begingroup$ Fama/French has portfolios formed on dividend yields (mba.tuck.dartmouth.edu/pages/faculty/ken.french/…). This could be the starting point for your research. $\endgroup$ – Helin Jul 31 '16 at 18:04
  • $\begingroup$ @haginile: That is interesting - Thank you. $\endgroup$ – vonjd Jul 31 '16 at 18:21
  • $\begingroup$ Consider that in the US individual investors pay income tax on dividends while university endowments, foundations and pension plans do not. So the answer could get complicated: outperform for which kind of investor? $\endgroup$ – noob2 Aug 2 '16 at 19:49
  • $\begingroup$ @noob2: Normally tax considerations are not part of performance measures. $\endgroup$ – vonjd Aug 3 '16 at 6:22

The highly respected CXO Advisory Group has done some research on this topic on basis of a suggestion from me. The result is summarized as follows (cited with permission):

In summary, evidence suggests that high-dividend stock ETFs mostly generate positive alpha with beta less than one relative to SPY, but other performance comparisons to the market are mixed.

After having read the very interesting post I have to say that the case is far from closed but all in all high-dividend stocks don't seem to have a clear edge over the broad market.

The full piece can be found here but most of it is behind a paywall: https://www.cxoadvisory.com/29079/fundamental-valuation/do-high-dividend-stocks-really-beat-the-market/


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