White paper examines the shortfalls of equity income strategies that focus on dividend yield alone.
See Figure 11 – “Return and Risk Profiles” on Page 11.
“Historical return research validates taking this more integrated approach as the companies that grew dividends and had positive shareholder yields achieved stronger absolute and risk-adjusted returns (Figure 11).”
Summary:
“Equity Income Investing: Beyond Dividend Yield” from Johnson Asset Management discusses the importance of dividends in long-term shareholder returns and introduces the concept of shareholder yield, which includes dividends, share repurchases, and debt reduction. The authors argue that focusing solely on dividend yield may overlook other significant forms of capital return to shareholders. They suggest that a comprehensive approach, considering both dividends and share buybacks, can provide a more accurate assessment of a company’s commitment to returning value to shareholders.
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