Fishing for low-volatility dividend stocks

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It’s time to introduce the Pickled Perch portfolio

Temperatures surged earlier in March, which prompted dreams of sun-filled summer days just around the corner. Personally, I’m looking forward to indulging in perch and bubbly beverages on the shores of Lake Erie this summer., which is up almost 9 per cent over the past 12 months. I’ll also take the opportunity to introduce the Pickled Perch portfolio, which is closely related to the original.

The Pickled Perch portfolio begins with the same list of candidates, but flips the next two steps. It keeps the half of dividend payers with the lowest P/Es and buys the 20 with the lowest volatilities over the prior 260 days. The Perch Portfolio was about 9 per cent more volatile than the Pickled Perch portfolio over the period, but the latter provided slightly better risk-adjusted returns as measured by each portfolio’s Sharpe ratio.

 

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