As I have have commented many times within this blog, MFI stocks that pay a 2.6% yielding dividend or greater have historically outperformed. I was asked how that varies by market cap, so I put together a quick pivot table:
| Mkt Cap Decile | Annual Gain |
| 1 | 24.2% |
| 2 | 37.4% |
| 3 | 33.3% |
| 4 | 28.8% |
| 5 | 17.3% |
| 6 | 6.9% |
| 7 | 21.2% |
| 8 | 9.7% |
| 9 | 19.8% |
| 10 | -4.4% |
| Grand Total | 20.8% |
As a reminder, market cap deciles 1-4 correspond to market caps about $960m or greater. So it seems that a good strategy (at least via a backtest) would be to buy MFI stocks in the top 50 greater than 100m market cap, that pay a dividend of 2.6% or greater and are $1 billion+ in market cap.
 |
| Very Interesting |
Posts
6 comments:
Thanks very much, for the Dividend by market cap post. The caaps over 960M will also have tighter spreads to buy and to sell.
Good evening Marshall, Thanks for the comparison and all the interesting work you do. I am confused though about this statement "(it) would be to buy MFI stocks in the top 50 greater than 100m market cap, that pay a dividend of 2.6% or greater and are $1 billion+ in market cap". It seems to say buy MFI greater than 100m AND buy greater than 1 billion. How can it be both? Can you straighten me out on this? Thanks, Karl
Karl,
Marsh has used the screen 50 greater than 100mm market cap since he began compiling data. Out of this screen, backtesting shows buying stocks over a billion market cap that pay 2.6%+ dividend would do well.
There might be 5 stocks that qualify. If he/you did a screen of the 50 greater than 1 billion, buying the stocks with a 2.6%+ dividend might perform well, but Marsh hasn't compiled that data. (as far as I'm aware)
Also, the stocks in the 50 greater than 1 billion would contain stocks that scored lower on the MFI metrics, earnings yield and return on capital.
Hope that helped.
Brian.
Brian - that is correct. Use e MFI screen for over $100 million. And then buy stocks within that screen over $1 b in market cap with the higher dividend.
Thanks Brian and Marsh, appreciate it. Karl
Marsh,
Can you tell me the ranges of the market caps that you divided into deciles? Specifically the top 4 deciles?
Thanks!
Post a Comment