The Defensive Dividend Aristocrats rallied again and outperformed the S&P 500 index last month.
US equities continued their rally in July, the S&P 500 gained 5.6% and the Dividend Aristocrats followed closely with 5.13%. The investors struggled a bit mix signals, weak macroeconomic data, concerns on the COVID-19 virus combined with Fed stimulus, and some strong earnings, especially from big techs. For the first time since the peak in February, the S&P 500 index is again above the closing of the end of last year. Year-to-date the S&P 500 is now up +2.38%.
The Defensive Dividend Aristocrats rallied again and gained 6.3% after the paused in June, and the total return is now 3.31% in 2020. The defensive version is outperforming the dividend aristocrats and the S&P 500 index.
The defensive approach
The Defensive Dividend Aristocrats’ objective is to outperform the Dividend Aristocrats over any five-year rolling time horizon, especially in bear markets. The maximum draw-down (mdd) should be lower.
The idea of the Defensive Dividend Aristocrats is to invest in 10 Dividend Aristocrats that are selected based on price-return and risk-ratios at year-end. Combined with the dividend growth characteristics of all Aristocrats, this should result in a comfortable set of companies for a long-term dividend portfolio.
The Defensive Aristocrats are selected on performance-based criteria:
- Geometric Annual performance of the last 10 years (GeoAP10)
- Win-ratio, the chance of a positive monthly performance (over 7000 calculations)
- Loss-ratio, the chance of a monthly loss multiplied by the weighted average loss
Aspects such as dividend yield or dividend growth are not taken into consideration in this approach.
Read more on: Defensive Aristocrats methodology
Performance Update July 2020
The Defensive Dividend Aristocrats are up +6.3% in July after gaining almost 18% in the second quarter of 2020, and the total return is now +3.31% in 2020. The Defensive Dividend Aristocrats are outperforming the S&P 500 and the US dividend aristocrats. The table below lists the monthly and annual performance.
Members can use the screener to find the current best dividend aristocrats based on loss-ratio.