Romping Stomping Emerging Bull

March 31, 2013

WisdomTree is out with a piece examining dividend yields and future emerging market equity returns.  Needless to say they are bullish!

Below are a few quotes and a chart before the download:

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+ The average performance of the MSCI Emerging Markets Index during years following high dividend yield values was 33.03%, more than 31 full percentage points above the return following low dividend yield years.

+ The years following high trailing 12-month dividend yields had performances that averaged over 15 percentage points more than the average performance of all 24 calendar years. The years following low trailing 12-month dividend yields on average performed about 15 percentage points worse than the average performance of all 24 calendar years.

+ Four of the five best yearly return periods for the MSCI Emerging Markets Index followed trailing 12-month dividend yields that ranked among the five highest of all 24 calendar year returns. Notably, at the 2008 year-end, the dividend yield on the MSCI Emerging Markets Index was 4.75% (the highest value) and the 12-month forward return of the index was 79.02% (the highest 12-month forward return).

+ On the other hand, the lowest observed year-end trailing 12-month dividend yield for the MSCI Emerging Markets Index was observed on December 31, 1999, and it was followed by the second-worst of all 24 yearly returns studied, specifically -30.61%.

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