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TWEEDY, BROWNE COMPANY L.P.
What Has Worked in Investing
(continued from preceding
page)
Annual Investment Return of Companies Priced Low in Relation to Earnings Relative to Other Companies in the Same Industry, 1962 through 1980
|
Valuation Company 1 (Lowest price/earnings ratio relative to other oompanies in the industry) 2 3 4 5 (Highest price/earnings ratio relative to other companies in the industry) |
Investment Return |
Value of $1 Million Invested 1962 - 1980 (Millions) |
One million dollars invested over the 18-year period from 1962 through 1980, in companies with the lowest price/earnings ratios relative to the price/earnings ratios of other companies in the same industry would have increased to $45,390,000. Over the same period, $1,000,000 invested in companies with the highest price/earnings ratios relative to the other companies in the same industry would have increased to $2,600,000.
High Dividend Yield in the United Kingdom
Mario Levis, Professor at The School of Management, University of Bath, United Kingdom, examined the association between dividend yield and investment returns from January 1955 through December 1988 in "Stock Market Anomalies: A Reassessment based on the U.K. Evidence," Journal of Banking and Finance, December 1989. Professor Levis, using a sample of 4,413 companies which were listed on the London Stock Exchange during January 1955 through December 1988 ranked all listed companies each year according to dividend yield and sorted the companies into deciles. The annual investment returns and the cumulative value of £1 million invested throughout the 34-year period in each of the ten groups is shown in Table 22, along with descriptive information concerning each group's average dividend yield and market capitalization.
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