The Gospel for Dividend Investors? Backtesting Performance of High Dividend ETF

Highlight

• Article Difficulty：★☆☆☆☆
• Exploring the Relationship Between High Dividend ETF, Weighted Returns, and Calculating the Total Dividend Yield.
• Using the TQuant Lab Backtesting Platform to Develop a Buy-and-Hold Strategy for High Dividend ETF and Backtest the Risk and Performance.

Preface

What is High Dividend Yield?

High dividend yield, as the name suggests, refers to companies distributing higher profits to investors in cash dividends without a specific definition of what constitutes a high dividend. While high dividend yield may sound appealing at first glance, it’s essential to recognize that every investment has pros and cons. Before entering into high-dividend ETFs, it’s crucial to consider the following two points to evaluate the most suitable investment approach :

• Pay attention to a company’s profitability: High dividends do not equal high returns. If a company is not making a profit or is incurring losses, even high dividend payouts are meaningless.
• Future investment development: When a company is profitable, it can use the funds for more investments, enhancing its value. However, if it provides high dividends to investors, the amount available for company investment will remain the same, potentially limiting its growth.

High Dividend ETF

This article will select the top 5 popular high-dividend ETFs in the market as investment targets:

1. 0056‘s full name is “Yuanta Taiwan Dividend Plus ETF” which tracks the “FTSE TWSE Taiwan Dividend+ Index“
2. 00713‘s full name is “Yuanta FTSE4Good TIP Taiwan ESG ETF” which tracks the “FTSE4Good TIP Taiwan ESG Index“
3. 00878’s full name is “Cathay MSCI Taiwan ESG Sustainability High Dividend Yield ETF” which tracks the “MSCI Taiwan Select ESG Sustainability High Yield Top 30 Index” MSCI stands for Morgan Stanley Capital International, one of the world’s three major index companies.
4. 00919’s full name is “CAPITAL TIP CUSTOMIZED TAIWAN SELECT HIGH DIVIDEND EXCHANGE TRADED FUND” which tracks the “Customized Taiwan Select High Dividend Index“
5. 00929’s full name is “Fuh Hwa Taiwan Technology Dividend Highlight ETF” which tracks the “Taiwan Technology Dividend Highlight Index“