The S&P 500 (SP500) rose 10.9% this month, the best November in its history and above the previous record, a 10.2% gain in November 1980. The Dow Jones (DJI) had the best month since 1987 and gained 11.9%. The Dividend Aristocrats (NOBL) even outperformed the best month of the S&P500 and gained 11.99% in November. Year-to-date, the Dividend Aristocrats are still underperforming the S&P 500 with a performance of 6.98% versus 14.02% for this main index.
The Defensive Dividend Aristocrats gained 9.05% in November, and the total return is now +9.79% in 2020. The Defensive Dividend Aristocrats are outperforming the US dividend aristocrats and just behind the S&P 500 index. The table below lists the monthly performance.
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
Members can use the screener to find the current best dividend aristocrats based on loss-ratio.