The Yield Effect

I've been browsing around the online archives of Columbia lately, and I ran into a video lecture with Christopher Browne from 07'. The video itself isn't great quality, but the audio is pretty amusing. Browne jokes around that the hardest part of value investing is fooling people into thinking its actually difficult.

Throughout the video you'll hear Browne talking about these high dividend stocks and the returns they have been producing over 20 years or so- turns out he has also written a paper about it.

Excerpts-

"The ability to pay cash dividends is a positive factor in assessing the underlying health of a company and the quality of its earnings. This is particularly pertinent in light of the complexity of corporate accounting and numerous recent examples of earnings management"

"In Tweedy, Browne's experience highy dividend yields are often associated with stocks selling at low prices in relation to earnings, book value, and specific appraisals of the value that shareholders would receive in a sale of the entire company...."

"Over the last 100 plus years, an investment in a market-oriented portfolio that included, most importantly, reinvested dividends would have produced 85 times the wealth of the same portfolio soley relying on capital gains"

Direct link to the Columbia video (Opens in Realplayer): Spring 07 Lecture
Direct link to Tweedy, Browne's paper: The High Divdend Yield Return Advantage

or on Scribd:
Highdiv Research

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