Slicing an asset by payout horizons unseals information about its future returns and cash flows. As an example, we slice an equity market index into granular pieces (dividend strips) and show that valuation ratios of its strips span the underlying …

The ratio of long- to short-term dividend prices, “price ratio” ($pr_t$), predicts annual market return with an out-of-sample $R^2$ of 19%, subsuming the predictive power of price-dividend ratio ($pd_t$). After controlling for $pr_t$, $pd_t$ …