Research Of Value Investing Strategy Based On The High Dividend Yield Portfolio In China's Securities Market

The rapid development of the security market in China enables more and more people to maintain and increase the value of wealth by way of security investment. But heavy investing loss tends to happen to investors just because security market is the high-risk pool and investors in China invest by experience and instinct for lack of investment knowledge. Based on the analysis above, appropriate guidance to investors is of great necessity.This article argues that the stock market of China comes very closely to weak efficient market based on the positive research on the efficiency test to the stock market of China conducted by several scholars. So, adopting value investing strategy enables investors to capture superior earnings. Accordingly, whether the policy of high dividend functioning as the basis of value investment calls attention to investors is drawn forth. Then this article comments the relationship between the value of the listed company and dividend policy, and the relationship between value investment and dividend policy.The third part of this article summarizes the basic conditions about the dividend policy of listed companies of China during the period 1999 to 2008 and national law & regulations on dividend policy. This part argues that the dividend policy of listed companies of China is increasingly improving and that cash dividend has become the main portion of dividend distribution conducted by listed companies. The dividend policy functioning as the appraisal basis of whether stock is worth value investing is more and more important.The fourth part introduces pre-existing investing strategy and investing strategy & earning position of individual investors of China. At the same time, it argues the huge prospect of the value investment.The fifth part introduces the essence and foreign application conditions of Dow Strategy which is one of value investing strategy. In addition, it introduces the importance of the dividend yield to stock selection applying the Dow Strategy.This article carries on positive research on the earning position of security portfolios characterized by high dividend yield in the security of China conducted by Greg Filbeck and Greg Filbeck to illustrate whether the policy of high dividend calls attention to investors. The result shows that security portfolios characterized by high dividend yield can beat the market whether annually or multi-annually. Security portfolios characterized by high dividend yield is efficient after considering the factors including risk adjustment, transaction and tax.This article reaches a conclusion in the last part and makes suggestions on the investing strategy, stock selection of investors of China and the construction of security markets.