Wednesday, October 22, 2008

Dividend Aristocrats are outperforming the markets in 2008

The Standard&Poors maintains several dividend indexes containing some quality large cap stocks for aspiring dividend investors.

The indexes are:

- The S&P Dividend Aristocrats Index which measures the performance of S&P 500 index constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. You could view the current list of components of the Dividend Aristocrats index from this page. This index is reviewed every December, thus I expect several companies which cut their payments to shareholders in 2008 to be booted out of the index in two months.

- The S&P High Yield Dividend Aristocrats Index is tracking the performance of the 50 highest yielding Dividend Aristocrats in the S&P 500 index. You could view the current components of this index on this page. This index is the only dividend aristocrats’ index that can actually be bought and sold through an ETF. The ticker of the High-Yield Dividend Aristocrats ETF is SDY.

- The S&P Europe 350 Dividend Aristocrats index tracks the performance of the stocks in the S&P Europe 350 Index which have increased their dividend payments for over 10 consecutive years. The current list of constituents could be found here.

- The S&P/TSX Canadian Dividend Aristocrats list tracks the performance of the S&P/Citigroup Broad Market Index of Canadian equities which have increased their dividends for at least seven consecutive years. You could access the constituents list from here.

The power of the dividend aristocrats has been evident in a turbulent year like 2008 so far. Below you could find the year to date performance of three out of the four indexes mentioned above: (Source S&P)

S&P Dividend Aristocrats Index -20.69%
S&P High Yield Dividend Aristocrats Index -21.92%
S&P Europe 350 Dividend Aristocrats index -34.93%

In comparison the S&P 500 index has lost 34.84% of its value since the beginning of the year as of October 17, while the S&P Europe 350 Index has lost 38.49%.

This goes to prove that the dividend aristocrat indexes have shown once again that dividend investors get the best of both worlds – rising dividend income as well as better price returns over time as compared to broad market indexes. This of course is not a one year phenomenon - the S&P Dividend Aristocrats Index has outperformed the S&P 500 over 50% of the time since its launch in 1989.

Relevant Articles:

- Why do I like Dividend Aristocrats?
- Long term returns of S&P high-yield aristocrats
- Historical changes of the S&P Dividend Aristocrats
- Current Aging of the Dividend Aristocrats

4 comments:

  1. I too have found that my Dividend Income portfolio has outperformed the S&P. In addition, the individual stocks have out performed my dividend income ETFs.

    Best Wishes,
    D4L

    ReplyDelete
  2. This makes yet another great case for our dividend growth investmetn strategy.
    THanks for taking the time to point this out.
    - Tyler

    ReplyDelete
  3. do you invest in these indexes as well or just the individual stocks in these indexes?

    I've been looking to increase my holdings with young healthy, dividend yielding companies and the current yields are coming to an attractive level.

    ReplyDelete
  4. D4L and Tyler,

    Steady dividend growers are exactly the type of stocks to hold during bear markets. The dividend portion of the total returns becomes even sweeter..

    Jae,

    I do own mutual funds/etf's but these are on the major indexes in the world. I don't own any dividend funds/etfs, only individual dividend stocks..

    ReplyDelete

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