Could you predict stock returns with dividend-yields?


OOS = out-of-sample. IS = in-sample. When a line goes up, the variable helped predict. When it goes down, it hurt.

Ergo: Even dividend yields did not predict well out-of-sample. In-sample, they predicted well until about 1973.

Not shown, the same holds true for other variables we tried. and The latter explains how dividend yields predicted primarily themselves, rather than changes in growth or stock returns.

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