This study examines whether companies performance based on dividend yield are effective in the stock-dividend-prevailing markets. Besides adopting various dividend yield rankings, this study incorporates some financial variables to build portfolios. Empirical results show that for the 2003 to 2007 period, cash dividend companies yielded significantly higher annual returns than stock dividend companies, market indices, and other types of dividend yield. The results remain significant after risk adjustments. Finally, the findings of this study are robust various factors, such as the 2008 financial tsunami, and the performance of companies over multiple years. Those results imply that the cash-dividend-yield ranking is an indicator of future returns in the Taiwan market.
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