Without much fan-fair, the venerable value firm of Tweedy Browne has opened a new mutual fund that capitalizes on the favorable characteristics of investing in high dividend yielding stocks.
In introducing “The Worlwide High Dividend Yield Value Fund”, the firm has outlined all the reasons that investing in high yielding stocks can be extremely rewarding.
In today’s investment world, dividend considerations seem to get pushed aside in favor of more esoteric investment vehicles or more exciting high growth stocks. But examining the evidence from past experience can lead us to the conclusion that dividends should be a more important factor in portfolio construction. Tweedy Browne’s website highlights a detailed study that backs up their decision to build a new fund around this sound concept.
The study concludes that over the long term, the return from dividends has been a significant contributor to the total returns produced by equity securities, stocks paying generous dividends are more resistant to price declines than the market as a whole, and dividends reinvested during market declines has been shown to lessen the time to recoup market losses.
In addition, Tweedy Browne says that when measuring the financial strength of companies, the ability to pay cash dividends is a positive factor in assessing the quality of earnings as presented in the financial statements. There is less risk of earnings management and manipulation. As accountants like to say, “Profit is an opinion, cash flow is fact.”
And, as a kicker, qualified dividends are now taxed at the same favorable rates as long term capital gains (15%).
The top holdings in the Worldwide High Dividend Yield Value Fund include Lloyds TSB, Total SA, Altria Group, Inc. Unilever PLC, and Eni SPA. According to Tweedy Browne’s website, the average yield of stocks in the fund is 4.36% as compared to a yield of 2.27% in the MSCI Index.
If you want detailed evidence of investing in High Dividend-yielding stocks, visit www.tweedy.com and read the study entitled “The High Dividend Yield Return Advantage: An Examination of Empirical Data Associating Investment in High Dividend Yield Securities with Attractive Returns Over Long Measurement Periods.”
In introducing “The Worlwide High Dividend Yield Value Fund”, the firm has outlined all the reasons that investing in high yielding stocks can be extremely rewarding.
In today’s investment world, dividend considerations seem to get pushed aside in favor of more esoteric investment vehicles or more exciting high growth stocks. But examining the evidence from past experience can lead us to the conclusion that dividends should be a more important factor in portfolio construction. Tweedy Browne’s website highlights a detailed study that backs up their decision to build a new fund around this sound concept.
The study concludes that over the long term, the return from dividends has been a significant contributor to the total returns produced by equity securities, stocks paying generous dividends are more resistant to price declines than the market as a whole, and dividends reinvested during market declines has been shown to lessen the time to recoup market losses.
In addition, Tweedy Browne says that when measuring the financial strength of companies, the ability to pay cash dividends is a positive factor in assessing the quality of earnings as presented in the financial statements. There is less risk of earnings management and manipulation. As accountants like to say, “Profit is an opinion, cash flow is fact.”
And, as a kicker, qualified dividends are now taxed at the same favorable rates as long term capital gains (15%).
The top holdings in the Worldwide High Dividend Yield Value Fund include Lloyds TSB, Total SA, Altria Group, Inc. Unilever PLC, and Eni SPA. According to Tweedy Browne’s website, the average yield of stocks in the fund is 4.36% as compared to a yield of 2.27% in the MSCI Index.
If you want detailed evidence of investing in High Dividend-yielding stocks, visit www.tweedy.com and read the study entitled “The High Dividend Yield Return Advantage: An Examination of Empirical Data Associating Investment in High Dividend Yield Securities with Attractive Returns Over Long Measurement Periods.”
