<!-- Swiftype Variables -->

White Papers

Incorporating Free Cash Flow Yield in Dividend Analysis

Dividend investing is an important part of total return generation over the long-term investment horizon. Our research shows that dividend-paying stocks have historically outperformed non-dividend payers. Moreover, the top-quintile portfolio ranked by dividend yield had higher risk-adjusted returns than the bottom-quintile portfolio. When choosing high-dividend-yield stocks, the sustainability and quality of dividends should not be overlooked. Our analysis shows that a portfolio of companies with high free cash flow yield outperformed the overall market and companies with low free cash flow yield. The negative correlation between the returns of free cash flow yield and dividend yield factors indicates that combining them in a multifactor framework can potentially offer diversification benefits. This paper examines whether incorporating free cash flow yield into dividend analysis can deliver superior risk adjusted returns than pure dividend yield or free cash flow yield portfolios, without sacrificing income.

Your download will start shortly. If your download does not start within 15 seconds, please click the link below to start your download.

  view more white papers

By downloading a white paper, you are agreeing to have your contact information shared with the content sponsor, who may then contact you.

All white papers posted were created by the listed authors who are solely responsible for the research, finding and all materials contained therein. Pensions & Investments has not verified or edited the materials (other than for length and style) and does not necessarily agree or disagree with the analysis and positions expressed by the authors. Reference to any company, product or service does not imply recommendation or sponsorship by Pensions & Investments.

For more information on submitting a white paper, please contact Richard Scanlon at rscanlon@pionline.com or 212-210-0157.