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

• Main Author: Ferdiana, Wemphy
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/76079
• Institution: Institut Teknologi Bandung

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.