ASSESSING THE EFFECTIVENESS OF THE DIVIDEND YIELD BASED INVESTMENT STRATEGY: A CASE STUDY OF THE DOG OF THE DOW STRATEGY IN THE INDONESIA STOCK EXCHANGE (IDX) LQ45 INDEX FROM 2012 TO 2022
The DoD strategy, traditionally applied in the context of the Dow Jones Industrial Average, is predicated on purchasing the ten highest dividend-yielding stocks at the start of each year. It is a methodology that promises a simple, yet effective, strategy for stock investment. However, its effica...
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| Format: | Theses |
| Language: | Indonesia |
| Subjects: | |
| Online Access: | https://digilib.itb.ac.id/gdl/view/76079 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The DoD strategy, traditionally applied in the context of the Dow Jones Industrial
Average, is predicated on purchasing the ten highest dividend-yielding stocks at the
start of each year. It is a methodology that promises a simple, yet effective, strategy
for stock investment. However, its efficacy in different markets and over varying
time horizons remains a topic of robust debate among scholars and practitioners
alike.
This research undertakes a rigorous examination of the Dogs of the Dow (DoD)
strategy within the specific framework of the Indonesian stock market, particularly
focusing on the performance within the LQ45 index from 2012 to 2022 with
objective to provide an updated evaluation of the DoD strategy's effectiveness
within the Indonesian market, specifically the LQ45 index. In addition, it assesses
whether the DoD strategy, with its focus on high dividend-yielding stocks, can offer
a suitable and potentially profitable investment approach for individual who are
relatively late to join the stock market or near retirement as well as adding depth to
the existing body of knowledge on dividend yield-based investment strategies in
emerging markets.
Although not all of the Dogs of the Dow portfolio manages to outperform the IDX
composite Index (IHSG) and the LQ45 Index, the empirical finding suggests that
the Fund Allocation portfolio and the Penultimate Profit Prospect have
outperformed the mentioned indices.
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