PT - JOURNAL ARTICLE AU - Wai Mun Fong TI - A Profitable Dividend Yield Strategy for Retirement Portfolios AID - 10.3905/jor.2016.3.3.051 DP - 2016 Jan 31 TA - The Journal of Retirement PG - 51--61 VI - 3 IP - 3 4099 - https://pm-research.com/content/3/3/51.short 4100 - https://pm-research.com/content/3/3/51.full AB - 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