Journal Of Indexes: Dividends Vs. Value

March 13, 2014

Finally, we stray from current price-based criteria to examine the final relevant value selection criterion—estimated earnings growth. Again, this criterion features in the selection process for the value stocks, so a significant reduction in earnings growth forecast would be expected. The average value for the best long-term earnings growth forecast for the value portfolio is, at 6.45 percent, significantly lower than the 11.04 percent earnings growth forecast for the base portfolio. But again, with this criterion, the dividend selection methodology results in an even lower average long-term earnings growth forecast of only 5.85 percent. The distributions of the value and dividend portfolio are very similar to each other, and both show a significant shift to the left compared to the base index. Figures 16-18 show the distributions of the results and further enhance this picture.

Dividend Indexes And Value Indexes

Dividend Indexes And Value Indexes

Dividend Indexes And Value Indexes

 

 

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