A chronicle of companies moving in and out of the S&P 500 Dividend Aristocrats index may not be as riveting as an episode of The White Lotus. But look behind the scenes. Stock market volatility is heightened these days, signaling a possible inflection point in market leadership. It’s a good time, then, for investors to turn their attention to stocks that pay dividends, especially the stocks of high-quality companies with steadily increasing payouts.
That’s the stomping ground of the Dividend Aristocrats index, which includes only companies in the S&P 500 benchmark that have consistently raised dividends for at least 25 consecutive years. Coca-Cola, Procter & Gamble and Walmart are longtime Aristocrats members.
Earlier this year, as part of the benchmark’s annual reconstitution, three new companies were added: insurance company Erie Indemnity, energy provider Eversource Energy, and FactSet Research Systems, which provides financial data and analytic services to investors. There were no deletions.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
ProShares S&P 500 Dividend Aristocrats (NOBL)
Exchange-traded fund ProShares S&P 500 Dividend Aristocrats (NOBL, $104, expense ratio 0.35%) is the only U.S. fund that tracks the Dividend Aristocrats index, which currently includes 69 stocks.
The ETF is an antidote of sorts to the concentration of the Magnificent Seven, those tech-related firms that drove market returns for much of the past two years. None of the Seven are Aristocrats, for starters; two of them, Amazon.com and Tesla, don’t even pay a dividend. And the Aristocrats index is equal-weighted — assets are evenly divided by each stock in the index, regardless of market value, dividend yield, or any other measure — and rebalanced quarterly. “It’s a ward against single-stock concentration,” says a spokesperson for S&P Dow Jones Indices. The ETF also yields 2.5%, which is better than the 1.2% yield of a comparable S&P 500 ETF.
Naturally, the absence of the Magnificent Seven in the Aristocrats index has hurt the relative recent returns of the ProShares S&P 500 Dividend Aristocrats ETF. Over the past five years, the ETF’s 11.5% annualized return has lagged the 16.9% average annual gain in the straight-up S&P 500. But over longer hauls, the Aristocrats index has turned in similar returns to the S&P 500, with less volatility.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
Stocks Slide to Start September: Stock Market TodaySeasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
Here's What You'd Have If You Invested $1,000 Into Sherwin-Williams 20 Years AgoSherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Stocks Slide to Start September: Stock Market Today
Seasonal trends suggest tough times for the stock market as we round into the end of the third quarter.
-
If You'd Put $1,000 Into Sherwin-Williams Stock 20 Years Ago, Here's What You'd Have Today
Sherwin-Williams stock has clobbered the broader market by a wide margin for a long time.
-
Where is the Foreign Dividend Boom Headed?It's been a golden six months for foreign dividend stocks, but can any be relied on for predictable income going forward? Here are some options.
-
The Unsung Hero of Aisle 5: A Tale of Forgotten Change and Compassion at the SupermarketThis supermarket manager went above and beyond to help when a child forgot her change at the checkout counter. You might be surprised at some of the complications that supermarkets face when it comes to customers' forgotten change.
-
Train, Integrate, Retain: A Strategic Playbook for Adviser OnboardingsBuild a thriving practice by training new advisers with clear goals, structured processes and consistent mentorship for strong team growth.
-
I'm a Financial Professional: Here Are Four Ways You Can Use Debt to Build WealthUsing debt strategically, such as for homeownership, education and more, can lead to greater financial stability and growth.
-
Five Key Wake-Up Calls for Ambitious Business Owners, From a Biz SpecialistYour personal financial plan needs to include a formal exit strategy for your business, or you could be in trouble.
-
I'm a Retirement Psychologist: Here's Why Doing What You 'Ought' in Retirement Beats Doing Whatever You WantTrue retirement freedom isn't about simply doing whatever you want, but about finding purpose and direction through commitments that align with your deepest values and allow you to contribute meaningfully.
