Glenstrata's just a silly word. Stick to big dividends

HQ: 8 February

Bally cold. Took the dogs out this morning for a quick trot over the meadows and came back frozen to the marrow. The Old Girl was fussing about in the kitchen and sounded quite unnecessarily churlish when I suggested that she might put the kettle on for a warming brew of English Breakfast.

Without doubt, this is a day to stay indoors, lob a couple of logs on to the fire and settle down for a spot of rumination about the state of the world.

The newspapers offer little to cheer one on this frosty afternoon. Genocide in Syria; no sign that the Europeans are going to sort out their differences any time soon; and here in Blighty, the government is apparently being told it may have to set some appalling extremists out of jail. Something to do with human rights or some such damn-fool nonsense. Makes one want to despair.

So on to the City pages. Bags of coverage about this Glencore (GLEN) - Xstrata (XTA) tie-up, of course. (And please, do the newspapers have to use this ridiculous Glenstrata moniker to label the corporate beast that might emerge from a merger?)

But one thing does catch my eye. A couple of brainy bods at the London Business School have been digging into a veritable mountain of investment data covering the past century or so to see what does best and when.

Intriguing stuff, this. Yes, there are conclusions that anyone could have guessed: over the very long term, for example, the total return from holding equities is far higher than from bonds. (Mind you, since the Millennium, bonds have been a better bet: in the decade to 2010, even if one reinvested all one's dividends, the real return on shares has been a big fat zero.)

Nevertheless, these business school boffins do come up with a couple of conclusions that do make one sit up and take notice.

First, inflation, it seems, is bad for equities. This doesn't square with my prejudices, I must say: one would think that equities were a good hedge. But no. Apparently, shares show better real returns when inflation is low - or, indeed, prices are falling. When inflation is galloping away, real returns are poor - although returns from bonds are even poorer.

Second - and this does fit with my view of the world - big, fat dividends are good. Look at investments over the long term - and this is as long-term as you could want, going back to 1900. Shares that have a high yield will offer a far higher total return than those whose payouts are meagre. In cash terms, high-yielding shares have offered a total return averaging almost 11% a year; the market average was 9.4%. Add it up over a decade or so, and that makes a big difference.

You may recall, dear reader, that I have in the past suggested putting a few bob into some shares that offer a high yield. One of my favourites is Vodafone (VOD).

I suspect that since I first shared that thought with you, Vodafone has actually underperformed the market. However, I stick to my guns: big divis are reassuring; they are good news. Now, it seems, those fiendish johnnies from the London Business School have buttressed my view. All most satisfying, I must say.

Anyway, on to the sports pages. Not much to catch my eye here. I was planning to pick out a good ante-post price for Cheltenham - I'll just contemplate the continuing reign of Kauto Star for the moment till the weather picture gets clearer.

Ah well. Another log on the fire. And I wonder if the Old Girl would make me a fresh cup of tea.