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Discovering The Dividend Growth Advantage Beyond Large Caps

Published Tue, 08 Sep 2020 10:25:33 -0400 on Seeking Alpha

Seeking AlphaDividend StrategyDiscovering The Dividend Growth Advantage Beyond Large CapsSep. 8, 2020 10:25 AM ET|| Includes: NOBL, REGL, SMDVby: Simeon Hyman, CFASimeon Hyman, CFA ETF investing, Dividend Investing, brick & mortar retail, online retailSummarySimilar to the S&P 500 Dividend Aristocrats, many mid- and small-cap companies with long histories of dividend growth have continued to grow dividends despite a challenging economic environment.
Quality seems to be driving resiliency: These mid- and small-cap dividend growers generally have stable earnings, solid fundamentals, and strong histories of profit and growth.
While quality usually comes at a price, a look at valuations of both the S&P MidCap 400 Dividend Aristocrats and the Russell 2000 Dividend Growth Indexes suggests otherwise.
Where Dividends Stood in July
Amid the tug-of-war between improving economic data and a resurgence of the coronavirus in the United States and around the world, dividend cuts have continued. But we have also seen a pattern of resilience from quality companies known for dividend growth. High-quality companies with long track records of consistently growing their dividends - companies that generally have had stable earnings, solid fundamentals, and strong histories of profit and growth - have so far shown a significant ability to maintain their dividend growth this year despite the pandemic and related economic crises.
While our Dividend Viewpoint series has focused to date on the large-cap companies of the S&P 500® Dividend Aristocrats® Index, in this article, we will review the resilience of mid-cap and small-cap dividend growth strategies as well. But, first, here is a look at the state of dividends through July.
Figure 1: Dividend Scorecard
Dividend Cutters versus Dividend Raisers, by Market Cap

Source: Bloomberg, ProShares. Based on dividend per share announcements from 1/1/20 to 7/31/20 broken down as a percentage of dividend... Read more


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