- The Dividend Aristocrats are companies of the S&P 500 that have paid steadily increasing dividends for at least 25 years have outperformed the broader market over time.
- On Tuesday, The Dow Jones Industrial Average DJIA, soared 2,113 points (11.36%) to close at 20,704.91, for its best one-day percentage performance since 1933. The S&P 500 Index SPX, was up 9.4%, while the Nasdaq Composite COMP, added 8.12%.
- By showing the performance of the Dividend Aristocrats since the all-time-high (ATH) of the S&P500 (2/19/2020), some active dividend growth investors may be able to identify some bargains in this “corona sell-off” period.
As coronavirus fears spread, U.S. equities were beaten down, the S&P 500 was more than 30% down since the all-time high in February. After the jump on Tuesday, the S&P 500 is now down -27.57% from its peak on February 19th and still in a bear market.
The chart below displays the S&P 500 total return and the dividend aristocrats ETF (NOBL).
As you can see the Dividend Aristocrats (NOBL) lost a -28.61% since the peak(s) in February. The Dividend Aristocrats declined almost at the same rate as the index, not showing its “defensive play”.
The table below lists all 64 constituents, including the 7 new aristocrats added in 2020, sorted by performance since 2/19/2020 till 3/24/2020:
About 50% of the dividend aristocrats performed better than the S&P500 during the indicated period. “Cleaning” company Clorox Company (CLX) is the only stock with a positive return.
Due to the drop in share prices, the average dividend yield is now around 3.5%. The table below lists all dividend aristocrats with a +5% dividend yield.
Long way to go
Many dividend aristocrat stocks still have a long way to go to return to their pricing-level of mid-February. The “issue” with a 50% drop is the fact that a 100% jump is required to get back to the same share price. The table below lists the dividend aristocrats, Tuesday’s closing price and the required increase percentage to get back to the old levels.
The Dividend Aristocrats are the ‘best of the best’ dividend growth stocks and do have a long history of outperforming the market with lower volatility. The lower volatility should give investors a “peace of mind” but for now they didn’t show the defensive character of the Dividend Aristocrats. Investors and emotions are typically not a good mix, so the advice is to stick to your investment plan, especially when it is based on dividend growth stocks for the long run. For those looking for some undervalued dividend aristocrats please check our dashboard or (paid) screeners.