Last week, S&P Dow Jones Indices published its annual rebalancing of the S&P 500 Dividend Aristocrats Index. Good news: no existing members of the index were deleted. More good news: seven companies meet the criteria for entry.
That means the ProShares S&P 500 Aristocrats ETF (CBOE: NOBL) could soon be getting some new holdings. 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.
NOBL currently has 57 holdings, but that roster could be elevated to 64 with the seven additions to its underlying benchmark.
S&P Dow Jones said the following stocks are joining NOBL’s benchmark: Amcor (NASDAQ: AMCR), Atmos Energy (NYSE: ATO), Realty Income (NYSE: O), Essex Property Trust (NYSE: ESS), Ross Stores (NASDAQ: ROST), Albermarle (NYSE: ALB) and Expeditors International of Washington (NASDAQ: EXPD).
The Weight Of A NOBL
Two of those stocks are materials names, a sector that currently represents 10.44% of NOBL’s weight. Another pair of real estate companies. The other potential new members of NOBL’s roster hail from the consumer discretionary, industrials and utilities. Those three groups combine for about 35% of the ETF’s weight.
NOBL’s emphasis on quality has helped the ETF perform less poorly and display less volatility than broader benchmarks when stocks swoon. Additionally, the fund’s focus on dividend growth over yields avoids companies that are financially burdened by their payouts, many of which reside in the high dividend category.
“Some market commentary of late seems to suggest the market is ripe for a pullback. When that does occur, investors having some exposure to the Aristocrats historically have been insulated from the full impact of the S&P 500’s decline,” according to Seeking Alpha.
NOBL’s emphasis on quality has helped the ETF perform less poorly and display less volatility than broader benchmarks when stocks swoon. Additionally, the fund’s focus on dividend growth over yields avoids companies that are financially burdened by their payouts, many of which reside in the high dividend category.
And while interest remains low, NOBL outperformed several of the largest high dividend strategies last year, confirming that quality wins out.
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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.