In the month of January, the most important factor correlation to performance of developed market stocks has been dividend yield (DY).

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Interestingly, though, the best performance has been generated in those stocks that belong to the lowest decile (those that pay a smaller dividend relative to their share price) while those with the highest DY have underperformed.

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The trend remains the same over the last year– during which time the dividend yield had a near 80% correlation with performance (i.e. it was in the top 20% of influential factors). Which brings us to the question: are companies being rewarded for offering lower and/or cutting back on their dividends?