This study aims to integrate itself into the scientific network of business administration by covering the topic of dividend strategies. Its main objective is to give a theoretical overview on the field of dividend orientated investment strategies under consideration of current scientific literature and research results. Additionally, a practical part is included as the study also applies the theoretical findings empirically by examining a possible outperformance of investment strategies on the German stock market.
Chapter 2 creates the basis as it explains the differences between passive and
active portfolio management under consideration of the market efficiency
hypothesis. As the active management style contains several different
approaches, it is divided in three main categories that are linked to different
stages of market efficiency. Due to the fact that dividend strategies aim to
outperform the market, they are assigned to semi-active and active portfolio
strategies. To get informed about different possibilities of measuring this
outperformance, the chapter finishes with a presentation of performance
analysis concepts that complement each other. Chapter 3 goes more into
details of dividend strategies as it divides them into two basic categories. As the active ones are partly complex and require the estimation of a company’s future growth rate, they are preferably used by institutional investors. In contrast to that, the semi-active dividend strategies can be easily applied also by individual investors as they are linked to objective and clearly defined actual figures. Moreover, a large number of investment opportunities have been developed and issued in the last years that make it easy to follow those dividend strategies. To get an overview on the state of research, several empirical studies concerning the success of dividend strategies on different markets are presented. The last chapter 4 contains an empirical study on the German stock market, which examines the advantageousness of the DivDAX in comparison to the DAX over a time frame of 11 years. After an interpretation of the results, combined with an outlook on possible future research questions, a general conclusion of the theoretical and practical part is made in chapter 5.
Table of Contents
- 1 Introduction
- 1.1 Problem definition
- 1.2 Scope of work
- 2 Theoretical basis of portfolio management
- 2.1 Passive portfolio management
- 2.1.1 Definition and process
- 2.1.2 Tracking methods
- 2.1.3 Market efficiency hypothesis
- 2.2 Active portfolio management
- 2.2.1 Visual approach
- 2.2.2 Quantitative approach
- 2.2.3 Qualitative approach
- 2.2.4 Active performance analysis
- 3 Systematisation of dividend strategies
- 3.1 Active dividend strategies
- 3.1.1 Basics of the Dividend Discount Model
- 3.1.2 Single-stage Dividend Discount Models
- 3.1.3 Multi-stage Dividend Discount Models
- 3.2 Semi-active dividend strategies
- 3.2.1 Dow Dividend Strategy
- 3.2.2 Top-10/Low-5 Strategy
- 4 Empirical study on the DivDAX
- 4.1 Concept of the DivDAX
- 4.2 Purpose and examination design
- 4.2.1 Formulation of hypotheses
- 4.2.2 Data selection and methodology
- 4.3 Results of data analysis
- 4.3.1 Hypothesis 1
- 4.3.2 Hypothesis 2
- 4.4 Interpretation of results
Objectives and Key Themes
This thesis aims to investigate the potential for outperformance through dividend strategies within portfolio management. It explores both passive and active approaches, examining their theoretical underpinnings and practical applications. The empirical section focuses on analyzing the DivDAX to test specific hypotheses related to dividend strategies. * Passive vs. Active Portfolio Management * Dividend Discount Models and their variations * Specific Dividend Strategies (e.g., Dow Dividend Strategy) * Empirical Analysis of Dividend Strategies using the DivDAX * Performance Evaluation and Hypothesis TestingChapter Summaries
1 Introduction: This chapter sets the stage for the thesis, defining the problem of achieving outperformance in portfolio management and outlining the scope of the research. It introduces the central question of whether dividend strategies offer a pathway to superior returns compared to traditional approaches. The scope is clearly delineated, specifying the theoretical frameworks and empirical analysis to be undertaken. The introduction also highlights the relevance of the topic within the broader field of financial markets and investment strategies. 2 Theoretical basis of portfolio management: This chapter lays the groundwork by exploring the theoretical foundations of portfolio management, distinguishing between passive and active approaches. Passive portfolio management is defined, and its methodologies, including tracking error and market efficiency hypotheses, are examined. Active management is contrasted, discussing visual, quantitative, and qualitative approaches, alongside active performance analysis methodologies, preparing the ground for a detailed discussion of dividend strategies in subsequent chapters. This section provides the necessary context for understanding the different approaches to investment and the rationale behind choosing specific strategies. 3 Systematisation of dividend strategies: This chapter delves into the heart of the thesis, systematically categorizing and analyzing dividend strategies. It begins with an explanation of active dividend strategies, focusing on the Dividend Discount Model (DDM) and its various applications, such as single-stage and multi-stage models. This provides a crucial theoretical basis for understanding how dividends are valued and how they influence investment decisions. The chapter then shifts to semi-active dividend strategies, illustrating the Dow Dividend Strategy and the Top-10/Low-5 Strategy. These examples provide concrete applications of the theoretical framework laid out earlier. The diverse approaches presented highlight the spectrum of options available for investors utilizing dividend-based investment techniques. 4 Empirical study on the DivDAX: This chapter presents the empirical investigation conducted using data from the DivDAX. It outlines the study's design, hypothesis formulation, and the methodology employed for data selection and analysis. The results of the data analysis concerning the proposed hypotheses are presented, forming the core of the empirical contribution of the thesis. While the precise findings are not revealed here, the methods and data sources are clearly explained, setting the stage for the interpretation and conclusions presented in later parts of the thesis (which are not summarized here to avoid spoilers).Keywords
Portfolio Management, Dividend Strategies, Passive Investing, Active Investing, Dividend Discount Model, DivDAX, DAX, Market Efficiency, Outperformance, Empirical Analysis, Hypothesis Testing, Risk Management.
Frequently Asked Questions: A Comprehensive Language Preview of Portfolio Management and Dividend Strategies
What is the main topic of this document?
This document is a comprehensive preview of a thesis investigating the potential for outperformance in portfolio management through dividend strategies. It explores both passive and active approaches, their theoretical underpinnings, practical applications, and empirical analysis using the DivDAX.
What are the key themes explored in the thesis?
The key themes include passive versus active portfolio management, dividend discount models and their variations, specific dividend strategies (like the Dow Dividend Strategy), empirical analysis of dividend strategies using the DivDAX, performance evaluation, and hypothesis testing.
What are the main chapters and their content?
The thesis is structured into four chapters: Chapter 1 (Introduction) sets the context and research scope. Chapter 2 (Theoretical Basis) explores passive and active portfolio management theories. Chapter 3 (Systematization of Dividend Strategies) categorizes and analyzes various dividend strategies, including the Dividend Discount Model and specific examples. Chapter 4 (Empirical Study on the DivDAX) presents an empirical investigation using DivDAX data, including hypothesis formulation, methodology, results, and interpretation.
What is the objective of this thesis?
The thesis aims to investigate whether dividend strategies can lead to outperformance in portfolio management compared to traditional approaches. It seeks to analyze both passive and active dividend strategies and empirically test specific hypotheses using data from the DivDAX.
What are some specific dividend strategies discussed?
The thesis discusses both active and semi-active dividend strategies. Active strategies are analyzed through the lens of the Dividend Discount Model (DDM), including single-stage and multi-stage models. Semi-active strategies exemplified include the Dow Dividend Strategy and the Top-10/Low-5 Strategy.
What data is used in the empirical analysis?
The empirical study focuses on the DivDAX, a dividend-focused index. The thesis details the data selection methodology and the specific hypotheses tested using this data.
What are the key takeaways from the chapter summaries?
The introduction establishes the research question and scope. The theoretical chapter lays the groundwork for understanding passive and active management. The dividend strategies chapter provides a systematic analysis of different approaches. The empirical chapter outlines the methodology and data used in the DivDAX study but leaves the detailed results for the full thesis.
What keywords are associated with this thesis?
Keywords include Portfolio Management, Dividend Strategies, Passive Investing, Active Investing, Dividend Discount Model, DivDAX, DAX, Market Efficiency, Outperformance, Empirical Analysis, Hypothesis Testing, and Risk Management.
- Citation du texte
- Tasso Politis (Auteur), 2011, Outperformance through dividend strategies, Munich, GRIN Verlag, https://www.grin.com/document/175243
