TY - JOUR T1 - A Profitable Dividend Yield Strategy for Retirement Portfolios JF - The Journal of Retirement SP - 51 LP - 61 DO - 10.3905/jor.2016.3.3.051 VL - 3 IS - 3 AU - Wai Mun Fong Y1 - 2016/01/31 UR - https://pm-research.com/content/3/3/51.abstract N2 - With life expectancy rising and social security payouts diminishing, equities continue to be an important asset class in retirement portfolios. However, choosing the right type of stocks can make a significant difference to retirement wealth and funding adequacy. Motivated by clean surplus accounting theory, we propose a strategy that focuses on stocks with both high gross profitability and high dividend yield. Simulations of long-horizon returns show that this “profitable dividend yield,” or PDY, strategy significantly outperforms diversified equity portfolios in terms of funding adequacy. As a bonus, PDY stocks have lower downside risks than the market in the short term.TOPICS: Retirement, security analysis and valuation, equity portfolio management ER -