There is a reasonable case that 'value' (low beta) stocks exhibit excess returns in equity markets. See Fama & French http://citeseerx.ist.psu.edu/viewdoc/down

There is a reasonable case that 'value' (low beta) stocks exhibit excess returns in equity markets. See Fama & French http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.459.4558&rep=rep1&type=pdf http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.459... M&M says there shouldn't be 1st order implications for a firm's dividend payout ratio on its stock price (there are potential effects caused by taxes, agency and signalling that they assume away for simplicity). However, other popular value metrics such as low price to earnings, market cap to book value, historic beta or past/future earnings growth are not affected by M&M. The efficient market hypothesis is an assumption rather than an implication of the theorem and there is a good empirical case for the combination of value investing and leverage.