Strategy tests · Test 1
We tested the claim "Higher-yielding UK shares cut their dividends more often"
Verdict: The claim held.
| Group | Cut within 12 months | Observations |
|---|---|---|
| Q4 highest yield | 26.1% | 567 |
| Q3 | 21.6% | 559 |
| Q2 | 18.2% | 566 |
| Q1 lowest yield | 11.1% | 552 |
UK large caps, 2015 to 2024. Source: dividendmapper.com, strategy test 1.
What we found
Q4 highest yield: 26.1% cut their dividend within 12 months, across 567 observations. Q1 lowest yield: 11.1%, across 552. The gap is 15.1 percentage points, with a 90% range of 11.3 to 18.8.
How the test worked
- Q4 highest yield. Quartile 4 of 4 by trailing dividend yield (1 is lowest), set on each date.
- Q1 lowest yield. Quartile 1 of 4 by trailing dividend yield (1 is lowest), set on each date.
- Q2. Quartile 2 of 4 by trailing dividend yield (1 is lowest), set on each date.
- Q3. Quartile 3 of 4 by trailing dividend yield (1 is lowest), set on each date.
- Universe: UK-listed companies with a market value of at least $2bn, observed every six months from 2015 to 2024.
- A cut means the dividends paid over the next 12 months fell more than 2% below the 12 months before, with one-off special dividends excluded.
- The test was registered as number 1 before it ran, with the effect it had to show set in advance.
Data quality
- Observations with no cut label (forward window past the data, or no trailing dividend): 3.
- Q4 highest yield: 8 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.
- Q1 lowest yield: 8 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.
- Q2: 6 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.
- Q3: 9 observations had no share price a year later (taken over or delisted). A takeover ends the dividend, so these can count as cuts.
Limits
- Market value above $2bn approximates, but is not, FTSE index membership.
- Companies that delisted have partial price histories, so the survivor correction is incomplete.
- This tests what happened to dividends, not what an investor would have earned.
Data
Download the per-period data (CSV). Dataset 2b6b505eef56, gate rules version 1.