| Author(s) | Nabeel E. Al-Loughani, Talla M. Al-Dehani, and Khalid M. Al-Saad |
| Affiliation | Department of Finance and Financial Institutions, College of Business Administration, Kuwait University, P.O. Box 5486, Safat 13055, Kuwait |
| Title | Stock Dividend Yield and Investment Rates of Return in Kuwait Stock Exchange |
| Source | Journal of King Saud University. Administrative Sciences. Volume 17, No 1. (2005/1425) |
| Abstract | The purpose of this paper is to test the validity of the Dow-10 investment strategy in the Kuwaiti Stock Market. Dow-10 is an investment strategy based on the selection of the 10 stocks with the highest dividend yield out of the Thirty stocks used to calculate the Dow-Jones-Industrial Average. The paper compares the performance of a portfolio made up of the 10 Kuwaiti stocks with the highest dividend yield with the performance of the market portfolio over the period 1992 to 2000. The results reveal that the risk- adjusted returns of the Dow-10 portfolio are much higher than the returns of the market portfolio. Paired T-test results show that the high dividend yield portfolio returns are significantly higher than the market portfolio returns, even after adjustment for risk and transaction cost. This, indirectly, suggests that the Kuwaiti Stock Market is less than efficient. |
