6 High-Dividend-Growth Healthcare Stocks With Low Turnover, Beta, And Payout Ratios
By Jeff Paul:This article continues my series on consistent dividend growth stocks with a low stock turnover ratio. This screening idea comes from research by Robert Ibbotson, a Yale finance professor. He found that illiquid stocks tended to outperform more liquid stocks. He offered three explanations for this:
- Investors prefer liquid stocks to illiquid stocks; therefore they pay a premium for liquidity, making those stocks overpriced.
- As the supply of capital grows, all stocks become more liquid, but the least liquid stocks receive the greatest relative benefit.
- More popular stocks attract more interest and attention, which results in less chance to score outsized future price gains.
Illiquidity was defined in relative terms as the average trading volume for a stock divided by its outstanding shares. Therefore it does not just mean small-cap stocks with low floats. I modified this definition by multiplying by 365 to create an annual turnover percentage, which IComplete Story »