The U.S. equities showed mixed results, with the S&P 500 posting a gain of 2% last month while the Dividend Aristocrats dropped just a bit more than 1%. For the first half of 2021, the results are overall very strong. Year-to-date, the Dividend Aristocrats are up 15.25%, while the S&P 500 is up 14.52%.
Performance Update June
The Defensive Dividend Aristocrats dropped 1.54% in June, and the total return is now 6.15% 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.
However, in the long run, the performance of the defensive aristocrats is still above the S&P 500 and dividend aristocrats as shown in the chart and table below.
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.