ETF Trends CEO Tom Lydon discussed the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) on this week’s “ETF of the Week” podcast with Chuck Jaffe on the MoneyLife Show.
NOBL is the only ETF that tracks the S&P 500 Dividend Aristocrats, the high-quality companies in the S&P 500 with at least 25 consecutive years of dividend growth. Its index, the S&P 500 Dividend Aristocrats, has outperformed the S&P 500 with lower volatility. NOBL, from ETF issuer ProShares, is part of the largest suite of ETFs focused on dividend growers, covering various U.S. market caps as well as international markets.
In the current low interest rate environment, finding higher interest rate performing strategies has become increasingly important to investors. NOBL offers a proven approach to growing dividends over time.
“It is a classic, but it’s also in a modern form…With rates as low as they are today, looking at dividends, dividends are really attractive. But the big kicker here with this ETF and with this Dividend Aristocrats strategy is if you’re disciplined in the way you invest in dividend oriented stocks, and specifically stocks that grow their dividend over time, it’s been proven that you can actually outperform the market,” Lydon explained.
NOBL is a classic ETF strategy that concentrates on high quality dividend growing stocks, as Lydon clarifies.
“When you talk about reliable dividend growing stocks, there are really common traits that define high quality, growing companies that grow their dividends and tend to have long histories of profit and growth. It gets away from picking hot stocks during different periods of time, especially during different market cycles. So they typically have strong fundamentals, they always have stable earnings, and really the strength comes from the top. You know, the management team that has conviction of a firm committed to shareholders,” Lydon added.
One particularly unique benefit of NOBL is that it allow investors to capitalize on the upside of markets, but mitigates some of the damage in the event that the market suffers, a key consideration given the late market cycle the U.S. is currently in.
“What Proshares has done in accordance with S&P and their Dividend Aristocrats ETF indices, they’ve gone in and said look, we’re only going to have stocks in this index that have consistently increased their dividend over the past 25 years. So there’s some companies you might look to like an Amazon for example that says you need to have that in your portfolio to keep up with the markets. Well guess what? You don’t. This strategy has consistently beaten the market over long periods of time; it captures 92% of the upside, but only 74% of the downside. So here’s a situation, where in this day and age, where we’re kind of late market cycle, it’s the best of all worlds: a disciplined strategy that only has consistent dividend growers, an area of the market that gives you a decent income, especially when rates are low, and if we are late market cycle, and we do get more volatility in the marketplace, you’re not gonna give back as much as the S&P 500 for example,” Lydon said.
Listen to the full podcast episode on NOBL here:
For more podcast episodes featuring Tom Lydon, visit our podcasts category.