Dividend Aristocrat Performance: September 2020

Seeking AlphaDividend StrategyDividend Aristocrat Performance: September 2020Oct. 1, 2020 12:03 PM ET|| About: ProShares S&P 500 Dividend Aristocrats ETF (NOBL), Includes: AMZN, CVX, ED, SPY, XLK, XOMby: PloutosPloutos Value, Momentum, portfolio strategy, CFASummaryComponents 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 September, the Dividend Aristocrats posted a -1.39% total return, outperforming the broad S&P 500, which returned -3.80% during the broad market sell-off.
By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to suss out relative bargains.
September 2020 was the first losing month for the broad market index since the large drawdown in March. The Dividend Aristocrats (NOBL) proved their defensive bonafides, outperforming in the September sell-off by 241bp on the month as depicted in the chart below.
Source: Bloomberg
The Dividend Aristocrat strategy has historically outperformed in down markets. The graph below depicts the performance of the Dividend Aristocrats versus the broad S&P 500 index from which they are pulled in each of the last six down years for stocks - 1990, 2000-2002, 2008, and 2018 - in the past three decades.
This ability to outperform in down markets, and keep pace in up markets has allowed the dividend growth strategy to beat the broader market over the past thirty-plus years. Since the beginning of 1990, owning S&P 500 components with at least a 25-year history of growing their dividends has outperformed the broad S&P 500 (SPY) by 1.78% per year.
Source: Bloomberg
Despite the tendency for the Dividend Aristocrats to outperform in down markets, the strategy has lagged in 2020. For the full year, the... Read more