How Dividend Yield Impacts Stock Volatility and Future Returns
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"The findings support the hypothesis that an increase in a firm's dividend yield tends to decrease future volatility."
Investors love big dividends, so much so that they're less likely to trade out of the stocks.
"Investors prioritize the receipt of dividends over their informational value regarding future earnings."
This love of dividends can lull investors into a false sense of complacency though.
Before the financial crisis, AIG, Bank of America, and Citigroup had 3-5%+ dividend yields, and many held on and lost their retirement.
The fat dividend checks blinded them to the huge risks they were taking.
I repost all yours stuff. Can’t wait to start publishing what y’all have taught men
Thanks for your support
"The findings support the hypothesis that an increase in a firm's dividend yield tends to decrease future volatility."
Investors love big dividends, so much so that they're less likely to trade out of the stocks.
"Investors prioritize the receipt of dividends over their informational value regarding future earnings."
This love of dividends can lull investors into a false sense of complacency though.
Before the financial crisis, AIG, Bank of America, and Citigroup had 3-5%+ dividend yields, and many held on and lost their retirement.
The fat dividend checks blinded them to the huge risks they were taking.