Is there a free lunch?
Yes, Virginia, but there is a caveat.
Many people here already know what I am about to say, but please indulge me if you find this boring.
I am not familiar with dividend stock strategy by Siegel, nor follow "sin" stocks. But I know about the Farma-French study that shows that value stocks outperform growth stocks. Does that come with an increase in volatility? I am not sure, but will get back to this later.
The effect is called "value tilt". How large is this effect? Over a long period, it's HUGE. Historical data shows that from Jan 1980 to Dec 2010, a period of 31 years, $10K invested in large cap growth stocks became $187K, but in small cap values, it became $602K. In the same period, investing in S&P 500 yielded $281K.
Note that the above are ideal values. One has to buy stocks in an MF or ETF and that incurs some costs. So, using Vanguard flagship VFINX, you would get $263K instead of $281K.
The data above is from a Web page by Fidelity (see below). The page by Fidelity shows all 6 categories: large-cap value/growth, mid-cap value/growth, small-cap value/growth, but not for S&P. So, I took the S&P and VFINX numbers from Morningstar. The data shows that value soundly beats growth in all 3 market cap categories after 31 years.
So, if value stocks are that great, what's the gotcha? Are they more volatile? If so, then that is the cost of the lunch, some say.
Looking at the data, I don't think that's the case. Instead, I believe what happens is that when value beats growth, it is only by a small amount. But when value trails growth, it is by a huge amount. In 1999, growth stocks jumped 50%, while value stocks were flat.
Yet, in the long run, value beats growth so soundly. The hare and the tortoise again. Nothing can beat the index every single year, because investors will flock to the winners and drive them into bubble territory and they crash hard subsequently. By the same token, individuals bailed out of value stocks during go-go years, and piled on to growth stocks which crashed hard when the bubble burst. Money managers did not do that well either, because they were pressured by their constituents to keep up with the index. In a year like 1999, if you were flat while the S&P was bid up 50%, you would be called stupid and lost your job. And so, you were not able to keep your career, so that later you could say that you beat the index and proved the "coin tossing monkey" argument wrong.
So, there is a "free lunch", but you have to be willing to wait for it, and investors are simply too impatient.
For more, see:
https://www.fidelity.com/learning-c...g/trading/value-investing-vs-growth-investing.