The ProShares S&P 500 Aristocrats ETF (CBOE: NOBL), which combines quality and dividend growth, continues drawing praise from various corners of the market.
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 ETF has a diversified portfolio, which aligns with the Dividend Aristocrats. It owns all of the Dividend Aristocrats, which totaled 57 at the end of 2019,” according to GuruFocus.com. “There are seven new additions to the Dividend Aristocrats for 2020, meaning the fund will add to its portfolio holdings to reflect these additions. Holdings are equally weighted, instead of weighted by market capitalization. This means no individual stock will become too large within the portfolio, further reducing individual stock risk.”
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.
The Allure of NOBL
Dealing with headwinds, such as political discourse, earnings pressures and more, advisors are looking for quality investments—strategies like the Dividend Aristocrats—that have a demonstrated history of weathering periods of market volatility. In other words, the current environment is ideally suited for strategies such as NOBL.
NOBL is a fine idea for long-term investors and historical data confirm as much.
“The evidence backs up this theory, as the Dividend Aristocrats have outperformed the S&P 500 Index over the past decade, with less volatility as well,” notes GuruFocus. “According to ProShares, the Dividend Aristocrats have captured the vast majority of the S&P 500 Index’s returns in previous bull markets, while avoiding some of the loss during downturns. In four of the past five worst downturns since inception, the Dividend Aristocrats outperformed the S&P 500 Index by an average of 4%.”
For long-term investors, particularly those with a time frame that can indulge reinvesting dividends, payout growth can have a substantial, positive impact on total returns, underscoring the point that dividend growth matters.
NOBL gained 2.34% last week.
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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.