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The wealth of information on this site is available in a handy-sized book. Buy it from your bookseller, or online here.

ISBN 978-1-906439-21-7

 

 

   

“High -Yielders Trounce the Market”

This article in Financial Mail on Sunday (3 July) refers to the performance of a share portfolio based on an investment strategy developed by US fund manager Michael O’Higgins. In his book Beating the Dow O’Higgins recommends buying shares in big companies that have the highest dividend yields. His basic strategy involves buying the ten highest yielding shares in the Dow Jones 30 share index, holding them for a year, and then selling those they have dropped out of the top ten (usually because their prices have risen and thus reduced the yield). Those that drop out are replaced by new entrants into the top ten. Over 18 years his strategies produced returns that were well ahead of the Dow Jones Industrial Average as a whole.

The portfolio selected by Mail on Sunday is based on the ten highest yielding shares in the FTSE 100 index. An investment of £10,000 four years ago would today be worth £14,365, whilst the same amount invested in the index as a whole would be worth only £8,860.

The O’Higgins system is simple: yields for large company shares are published in several daily and weekly newspapers as well as on the internet. It is also supported by a good deal of academic research (including my own). However, there are better strategies. An investment of £100 in January 1979 would have been worth £21,252 in March 1995 based on the best performing of several strategies based on my research into the UK stockmarket. We will be looking at these in more detail over the next few weeks.

 

 

  9 October, 2008 © 2008 K.R.Wade and Co Ltd prev page next page