There has been much talk about domain hyphenation with Google's response vague as usual. Dejan SEO team put this to test and in conclusion non-hyphenated domains have an advantage over hyphenated ones. For test specifics and results read on. Update Results of this test were published on SEOMoz on…
There has been much talk about domain hyphenation with Google's response vague as usual. Dejan SEO team put this to test and in conclusion non-hyphenated domains have an advantage over hyphenated ones. For test specifics and results read on.
Results of this test were published on SEOMoz on the 1 May 2011. The status of the ranking domain has changed since then in favour of the hyphenated domain. The advantage of this domain was the first position on the page. Since our test domains did not have their own title tag they inherited anchor text as their title. Notice the discrepancy between the title and the domain (love/loves) which does not seem to represent a problem and Google highlights both as a match in SERPs.

Here are the technical details of the setup:
We registered two domains:
They were registered seconds apart and in order as above using same whois information and custom name servers:
and:
Both domains were hosted on a different IP of the same C-block.
Both index pages contained only one line in the following format:
Did you know that keyword1keyword2keyword3keyword4.com
Did you know that keyword1-keyword2-keyword3-keyword4.com
No HTML.
Both test domains were linked from the same page on another domain. In the source code of the linking page, the first link was the hyphenated one, giving it the initial (if any) advantage over the other.
None of the above seem to have affected the test.