Do dividend clienteles exist? Evidence on dividend preferences of retail investors

John R. Graham, Alok Kumar

Research output: Contribution to journalArticlepeer-review

190 Scopus citations


We study stock holdings and trading behavior of more than 60,000 households and find evidence consistent with dividend clienteles. Retail investor stock holdings indicate a preference for dividend yield that increases with age and decreases with income, consistent with age and tax clienteles, respectively. Trading patterns reinforce this evidence: Older, low-income investors disproportionally purchase stocks before the ex-dividend day. Furthermore, among small stocks, the ex-day price drop decreases with age and increases with income, consistent with clientele effects. Finally, consistent with the behavioral "attention" hypothesis, we document that older and low-income investors purchase stocks following dividend announcements.

Original languageEnglish (US)
Pages (from-to)1305-1336
Number of pages32
JournalJournal of Finance
Issue number3
StatePublished - Jun 2006
Externally publishedYes

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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