Seeking Value In Dividend Investing

Investing for dividend return has long been considered a solid, if a bit stodgy, investment strategy. Stocks that pay dividends are typically a part of a total return investment strategy as reinvesting dividends enhances returns. However, the reality is dividends have been heading downward for a couple of decades until a recent bounce back.

Portfolio manager Mebane Faber suggests that considering what he calls shareholder yield is a advantageous way to compare stocks. Shareholder yield is a broad term including dividends, buybacks and other ways that management of a public enterprise can use to increase shareholder value. In his book, Shareholder Yield: A Better Approach to Dividend Investing, Faber explains an investor buying stocks screened using his shareholder yield method would have significantly outperformed that of an investor following dividend-only strategies.

Source: Value Walk

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