@article {Fong55, author = {Wai Mun Fong and Zhehan Ong}, title = {Dividends, Profitability, and Lifecycle Investing}, volume = {25}, number = {2}, pages = {55--63}, year = {2016}, doi = {10.3905/joi.2016.25.2.055}, publisher = {Institutional Investor Journals Umbrella}, abstract = {This article examines the efficacy of lifecycle investing for building retirement wealth by using bootstrap simulations. Under realistic assumptions about future earnings and savings, investment glidepaths that use broadly diversified market portfolios incur high shortfall or ruin probabilities. Motivated by clean surplus accounting, the authors propose an alternative equity strategy that blends stocks with a high-dividend-yield and high gross{\textendash}profit-to-asset ratio. We show that this profitable-dividend-yield approach generates far superior median wealth outcomes, significantly lower shortfall risk, and greater resilience in a low-return world.TOPICS: Retirement, simulations, equity portfolio management}, issn = {1068-0896}, URL = {https://joi.pm-research.com/content/25/2/55}, eprint = {https://joi.pm-research.com/content/25/2/55.full.pdf}, journal = {The Journal of Investing} }