RT Journal Article
SR Electronic
T1 Beating the Market: Dollar-Cost Averaging with the
Profitable Dividend Yield Strategy
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 54
OP 66
DO 10.3905/jwm.2017.20.2.054
VO 20
IS 2
A1 Wai Mun Fong
YR 2017
UL https://pm-research.com/content/20/2/54.abstract
AB Extensive evidence shows that lump sum investing (LSI) beats dollar-cost averaging (DCA) in most stock markets. We show that DCA investors are not doomed to inferior returns. Motivated by the clean surplus accounting model of asset pricing, we consider a DCA strategy that invests in stocks with a high gross profits-to-asset ratio and high dividend yield. Using block bootstrap simulations of long-horizon (20-year) returns, we show that this profitable dividend yield strategy significantly outperforms LSI in the market index in many dimensions.TOPICS: Security analysis and valuation, simulations, performance measurement