O'Higgins Method

[Morris]

Here's the data

1. Using the five cheapest of the ten highest yielders:

YEAR GROWTH RATE
1983 +56.22
1984 +38.97
1985 +45.61
1986 +31.05
1987 +8.42
1988 +26.74
1989 +31.96
1990 +2.43
1991 +28.09
1992 +42.75
1993 +36.26
1994 -11.83
1995 +16.69
1996 -2.89
1997 +17.67

AVERAGE: 24.54%


2.Using only 1st & 2nd Cheapest Highest Yielders:

YEAR GROWTH RATE
1983 +27.56
1984 +36.60
1985 +39.28
1986 +50.43
1987 +7.40
1988 +36.69
1989 +33.82
1990 +4.74
1991 +49.36
1992 +70.75
1993 +50.71
1994 -10.80
1995 +15.75
1996 -2.25
1997 +63.63
1998 +28.19

AVERAGE: 31.37%

 

[RogerM]

Thanks for that. It would be interesting to see data for 99 and 2000 - I bet 99nwas a poor year for high yielders. however, every dog has his day.

In April last year I closed 90% of my tech market positions and didn't know what to do with the loot. So using CD REFS I ran a screen of all FTSE350 shares which had a dividend yield that exceeded the return on long dated gilts - 5.65% at that time. It threw up a surprising number, and it was only trimmed back a bit when I required that the divi be covered 1.5 times. some companies like Abbey National were yielding over 6.5%, and BAT was yielding over 9%. A well covered rising divi at these levels seemed like a good deal, and better than the b'soc even if there was no capital growth. I stripped out any company that had not increased its divi in the previous 5 years, and ended up buying Abbey Nat, Gallaghers, Scottish & Newcastle, Royal BoS, and Bank of Scotland. Similar process to O'Higgins, and it worked just fine.