Dividend yield strategy in the Nairobi Securities Exchange
Date
2015-11
Authors
Mwangi, Archibald Macharia
Journal Title
Journal ISSN
Volume Title
Publisher
Strathmore University
Abstract
This study aims to test the viability of dividend yield investing as an alternative investment strategy to exploit observed overreactions in theā¢ market. The study adopts the Dogs of the Dow investment strategy that entails a buy and hold strategy of the highest dividend yielding stocks in the market. A back-testing approach is adopted from the period 2006 to 2015. The findings from this analysis show that there appears to be limited effectiveness of the DDS portfolio in beating the market or generating abnormal returns. As such, the study concludes that the Dogs of the Dow is not viable as an alternative investment strategy. The study further posits that any observations to the contrary may be as a result of data mining as was proposed by Fischer Black (1993).
Description
Submitted in partial fulfilment of the requirements for the Degree of Bachelor of Business Science in Finance at Strathmore University
Keywords
Dividend yield strategy, Nairobi Securities Exchange