Investigating Rising Dividend Investment Techniques: Evidence From Backtesting

This study uses backtesting to investigate how a variety of rising dividend strategies would have performed in the recent past. The backtest generates three main findings. First, every one of the rising dividend strategies had greater abnormal returns than the same strategies without the rising dividend criteria. Second, I discover a strategy that consistently produces the best abnormal returns across all tests generating an alpha of 4.5%. Third, I discover evidence that rising dividend strategies produce superior dividend returns when compared to stocks of the same yield. However, simply using a high dividend yield requirement generates better dividend returns than portfolios that include a rising dividend criteria. Overall, I find that the abnormal returns of rising dividend strategies are intricately connected with firm operating profitability.