Philosophy of dividend investing?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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NormR
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Re: Philosophy of dividend investing?

Post by NormR » 19 Sep 2017 19:30

ghariton wrote:
19 Sep 2017 18:01
My first reaction is that investing in Canadian dividend-payers is a very concentrated strategy. It achieved a high rate of return over the period you cover. But I would fear that the lack of diversification might make the strategy vulnerable in downturns.

Out of curiosity, how much of the out-performance is due to the inclusion of the banks? If I were making a concentrated bet in 2000, next to technology (which proved a disaster for me), I would have chosen the financial sector. I bet I would have done great.
There were 2 big downturns during the period. The 2000 bust and the 2008 bust.

Roughly 200 of the 300 stocks currently pay dividends. So the banks don't represent much of the average.

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NormR
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Re: Philosophy of dividend investing?

Post by NormR » 19 Sep 2017 19:32

DenisD wrote:
19 Sep 2017 18:11
OTOH, I think Norm published an article recently showing that low PE was the best value factor in Canada over the past 15 years. Unfortunately, it's behind a pay wall. But ISTR reading the hard copy.
https://beta.theglobeandmail.com/globe- ... e36238603/

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Re: Philosophy of dividend investing?

Post by AltaRed » 19 Sep 2017 19:36

Doesn't work for non-subscribers.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom

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NormR
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Re: Philosophy of dividend investing?

Post by NormR » 19 Sep 2017 19:40

AltaRed wrote:
19 Sep 2017 18:24
Think it would be better to look at a longer history, albeit 17 years covers 2 traumatic periods. I tend to agree with George that Canada's dividend payers are skewed to the financial sector, albeit I suspect Norm would argue a lot of energy/resource companies pay dividends (and included in the list) imploded a few times, including the past 2+ years. I suspect looking at the US market would be somewhat different.
The U.S. numbers are different but share buybacks are also much more popular. Shareholder yield has fared quite well in the U.S.

The time fame chosen basically corresponds to roughly the period I'm comfortable with Bloomberg's back testing function for Canadian stocks.

Prof French has Canadian dividend data going back to 1977 (IIRC). It provides similar results. The no-dividend group lags far behind the market and has yet to recover to its peak in 1981.

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Re: Philosophy of dividend investing?

Post by rapporteur » 19 Sep 2017 20:48

NormK cited the source:

https://beta.theglobeandmail.com/globe- ... e36238603/

However, AltaRed complained:
Doesn't work for non-subscribers.
But the solution for non-subscribers is simple: the cited page is on the wayback machine [www.archive.org]

Regards,

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