Stock Market in Brazil: Portfolio based on Dividend Payout or Technical Analysis Based on MACD?

Abstract

 

We identify the difference in return between a portfolio of the Ten Brazilian Companies that pay more dividends and results of investment decisions using a technical analysis indicator, the Moving Average Convergence-Divergence (MACD). Our goal was to verify whether, in the period 2008-2013, the results of the buy and hold strategy for earnings per dividend outweigh or not the speculative behavior of using technical analysis. We found evidence that decision focused on dividends are gainful. Average earnings were well above of those obtained by using the MACD, a relationship of 121.23% against 38.24%. We have identified that the results are greater when comparing the gains that would be obtained if the shares were bought at the beginning of the period and sold at the end (average of 97.54 percent). MACD results were higher than those that provided the main Brazilian stock index, the IBOVESPA, which in the period showed negative performance. Keywords: Returns, Dividends, MACD.