"High Dividend Yielding Large Cap Stocks Usually Out Perform the S&P 500"
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In his book What Works on Wall Street, James P. O'Shaughnessy tested many value and growth strategies to determine what actually worked on Wall Street.
He used information on stock prices from Standard & Poor's Compustat Active and Research database from 1950 through 1994.
He tested both the largest possible universe of stocks, which he called All Stocks, and the top 16% market cap, which corresponds basically to the S&P 500, which he calls Large Stocks.
One thing he did do for his study of the 50 highest dividend yielding stocks was exclude utilities, because they would have dominated the study with their stock dividends
I wish he'd done a separate study on them, but his findings still support my conclusion.
If you'd bought the 50 highest dividend yielding, large cap stocks (excluding utility stocks) in 1950, rebalanced every year and reinvested all shareholders dividends, you would have done about twice as well as his Large Stock universe as a whole, which does roughly correspond to the S&P 500. Plus, you would have done so without any risk.
Now, he was measuring Total Return, not just income, but his study shows that large cap stocks that pay out cash dividends do better on the average than large cap stocks that don't.
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