RT Journal Article SR Electronic T1 A Profitable Dividend Yield Strategy for Retirement Portfolios JF The Journal of Retirement FD Institutional Investor Journals SP 51 OP 61 DO 10.3905/jor.2016.3.3.051 VO 3 IS 3 A1 Wai Mun Fong YR 2016 UL https://pm-research.com/content/3/3/51.abstract 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