Published Mon, 02 Mar 2020 11:15:59 -0500 on Seeking Alpha
Components of the S&P 500 that have paid steadily increasing dividends for at least 25 years have outperformed the broader market over time.
This article demonstrates that historic outperformance and lists the current Dividend Aristocrat constituents and their recent returns.
In down months for the S&P 500, the Dividend Aristocrats have outperformed 70% of the time, driving the strategy's long-run outperformance.
That was not the case in the February sell-off as the Dividend Aristocrats lagged the broad market on average.
By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to suss out relative bargains in this virus-induced sell-off.
February ended with a thud as coronavirus concerns reverberated across markets. The last week of February saw a -11.4% return for the S&P 500 (SPY), the fourth worst weekly performance for the broad market index since World War II. On the month, the -8.2% return for the S&P 500 was its worst monthly performance since the December 2018 sell-off.
The Dividend Aristocrats, components of the S&P 500 that have paid increasing dividends from 25 or more years, tend to outperform in risk-off environments. Using the full available dataset for the Dividend Aristocrat Index dating back to January 1990, we have 362 monthly observations for the Dividend Aristocrats and the broader S&P 500. As tabled below, the Dividend Aristocrats tend to outperform in down months for the broad market more than 70% of the time.
The Dividend Aristocrats were slightly more likely to outperform in a given month (52.8% vs. 47.2%) in the sample period, but that has principally been driven by the overwhelming tendency to outperform in down markets.
Taking this same data and calculating annualized returns, we see that over this 30-plus year dataset that the Dividend Aristocrats have outperformed by roughly 2% annualized. This outperformance has been... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|ESSEX PROPERTY TRUST||324.02||52.2||6.21||7.80||2.43|
|SPDR S&P 500 ETF||301.29||0.0||0.00||5.42||1.82|
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