Dividend strategy

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A dividend strategy is generally understood to be a form of equity investment in which investments are made in the securities of companies that have a high dividend yield.

The economist and investor Benjamin Graham is considered to be the founder of the dividend strategy . The strategy became known under the name Dogs of the Dow . It contained the investment strategy of buying the ten securities with the highest dividend yield from the 30 securities that are represented in the Dow Jones Industrial Average Index. After a year, the dividend yields are looked at again and, if necessary, reallocated. At Graham's Value Investing , however, the dividend yield was not the sole assessment criterion. The value-oriented investor should primarily look for a low price-earnings ratio . Since the P / E ratio falls when a share price falls and, conversely, the dividend yield increases, Graham actually used the dividend yield as a subordinate (secondary) criterion.

Michael B. O'Higgins took up Graham's dividend strategy and modified it for the first time in 1991 in his book Beating the Dow . Accordingly, from the ten stocks of the Dow Jones with the highest dividend yield, the five that have the lowest price in nominal terms are to be selected. This modified dividend strategy is known as the dividend low-5 strategy.

There are now stock market indices that only contain stocks that have a high dividend yield. These include, for example, the DivDAX , which contains the 15 companies listed in the DAX that have the highest dividend yield, or the STOXX Global Select Dividend 100 , the 100 from a portfolio of 1,800 companies with the highest dividend yields from North and South America and Asia and Europe contains.

In addition to the focus on a high dividend yield, there are other modifications to the dividend strategy : Some investors prefer so-called dividend aristocrats , i.e. companies that have been paying and increasing their dividends continuously for many years. A dividend strategy can also be understood as generating monthly income from dividend distributions through a targeted combination of funds and stocks. There are also various shares that make monthly distributions.

literature

  • Michael O'Higgins; John Downes: Beating the Dow: a high-return, low-risk method for investing in the Dow Jones industrial stocks with as little as $ 5,000; .
    Published by HarperBusiness, New York. ISBN 978-0-06-662047-3
  • Dirk Huneke: Asset building with the dividend strategy: With monthly dividends protected against inflation for financial freedom; Paperback - Sept. 15, 2010 .
    Publisher: tredition. ISBN 978-3-86850-813-0

Individual evidence

  1. ↑ Use the dividend strategy "Dogs of the Dow". In: experto.de. August 27, 2013, accessed January 27, 2019 .
  2. ↑ The dividend strategy. In: EXtra-Magazin - Everything about ETFs. November 12, 2009. Retrieved January 27, 2019 .
  3. ↑ The O'Higgins Dividend Strategy. In: experto.de. July 11, 2008, accessed January 27, 2019 .
  4. ↑ Dividend Strategy Dogs-of-the-Dow 2018. Accessed January 26, 2019 .
  5. ↑ Selected equity strategies in the overview. In: Aktien-für-Beginners.de. Retrieved January 27, 2019 .
  6. ↑ DAX Digital | Deutsche Börse launches the DivDAX Dividend Index. Retrieved January 26, 2019 .
  7. ↑ STOXX: STOXX Digital | STOXX® Global Select Dividend 100.Retrieved May 1, 2019 .
  8. ↑ Jan-Christian Müller: What is THE dividend strategy? Growth vs. Return. April 2020, accessed April 30, 2020 .
  9. ↑ Dirk Huneke: Wealth building with the dividend strategy. Retrieved January 26, 2019 .
  10. ^ Monthly Dividend Stocks. In: Dividend.com. Retrieved January 26, 2019 .