Fix Your Roof While The Sun Is Shining: The Dividend Aristocrats Are (Sorta) On Sale

A large number of articles on Seeking Alpha are dedicated to dividend growth investing, and one finds no shortage of articles exhorting investors to consider the Dividend Aristocrats. To Seeking Alpha readers, these stocks need no introduction, but as regular contributor Ploutos reminds us in a recent overview, these are those select few companies (around 50 or so in number) that have increased their dividend payouts for 25 or more consecutive years.
These stocks appeal for a variety of reasons, chief among them having delivered excellent (and even market-beating) risk-adjusted total returns over the past few decades. But any investor buying the Dividend Aristocrats—say, through a tracking ETF like NOBL (BATS:NOBL)—would have to be mightily disappointed with the results so far this year.
NOBL Total Return Price data by YChartsThe graph isn’t appealing, and the numbers bear it out. Total returns for the Dividend Aristocrats, inclusive of dividends, has been a middling 0.5% YTD, versus a total return (including dividends) of about 5% so far for the broader S&P 500. Citing historical precedent, Ploutos points out that this underperformance could “signal that the bull market is over-extended.” If that’s the case, it would behoove careful investors to begin hedging their bets.
As a person who is looking to add some more stability to his portfolio, it makes me wonder: are the Dividend Aristocrats the answer? Are investors shifting away... Read more