Despite a sell-off in the last week of February, the month of February ended positively with the S&P 500 index posting a gain of 2.76%. This was driven by optimism on COVID-19 vaccines, as well as hopes for more fiscal stimulus.
The Dividend Aristocrats (NOBL) posted a modest gain of 0.72%, underperforming the S&P 500.
Performance Update
The Defensive Dividend Aristocrats dropped -0.33% in February, and the total return is now -3.98% in 2021. The Defensive Dividend Aristocrats are at the moment not able to top the US dividend aristocrats and the S&P 500 index performances. 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.
