With the S&P 500 down 11.70% over the past week, investors cannot be blamed if they feel as nothing is working in the equity market. One way investors can stick with equities or buy the dip is to consider strategies that have histories of performing less poorly than traditional funds when stocks swoon.
One of the names on that list should be the ProShares S&P 500 Aristocrats ETF (CBOE: NOBL). NOBL tracks the S&P 500 Dividend Aristocrats Index, targets the cream of the crop, only selecting components that have increased their dividends for at least 25 consecutive years. Consequently, investors are left with a portfolio of high-quality, sustainable dividend payers.
The S&P 500 Dividend Aristocrats Index has a track record of performing less poorly than broader benchmarks during downturns. That has been the case over five previous downturns spanning 2008 through late 2018, according to ProShares data.
Adding to the case near-term case for NOBL is that coming out of those downturns, the S&P 500 Dividend Aristocrats Index’s rebounds are often larger than broader indexes.
NOBL Looks Interesting Here
Improving earnings growth could bolster dividend growth in 2020. Investors should consider quality dividend growth stocks that typically exhibit stable earnings, solid fundamentals, strong histories of profit and growth, commitment to shareholders, and management team convection in their businesses.
NOBL gives investors a portfolio of high-quality, sustainable dividend payers as opposed to more high-yield focused funds that may contain companies on more precarious financial positions. The fund is trading slightly higher to start in 2020.
“If you’re looking for high-quality large-cap stocks that have a demonstrated history of weathering market turbulence, consider ProShares S&P 500® Dividend Aristocrats ETF (NOBL),” according to ProShares. “Many investors have come to expect outperformance of dividend growth strategies during periods of market stress. But perhaps even more impressive is that NOBL’s index outperformed the market in 11 of 13 subsequent periods from the index’s inception in 2005 to year-end 2019.”
Dividend strategies can help mute the impact of volatility by giving investors a steady income stream in the event the markets do get bumpy as a result of unforeseen news events. Historical data confirm NOBL can be a winning idea for investors with longer holding periods, making the fund an ideal choice for young investors just starting out.
For more on core investing strategies, please visit our Core ETF Channel.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.