Stocks with quality traits, including those with enviable track records of dividend growth, often possess defensive traits. Combine that with the dividend element, and these names can trade at premiums relative to the broader market.

Broadly speaking, that’s not the case today, and some members of the ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) roster remain attractively valued. NOBL tracks the the S&P 500 Dividend Aristocrats Index, which mandates that member firms have minimum dividend increase streaks of least 25 years.

That’s a high bar for entry and one that can imply premium multiples, but that’s not the case today.

“The Aristocrats are also trading at the cheapest valuation levels relative to the S&P 500 in over a decade,” says ProShares Senior Investment Strategist Kieran Kirwan. “While investors often pay a premium for quality stocks like the Aristocrats, causing them to trade at higher valuation levels when compared to the S&P 500, today’s situation is much different.”

NOBL 1 Year Performance

Dividend Royalty

NOBL isn’t a dedicated value fund, but has strong exposure to some sectors with the value classification, which is a plus at a time of strength for that factor. For example, the ETF devotes almost 36% of its combined weight to industrial and financial services stocks, according to issuer data. Add to that, the aristocrats are the cheapest they’ve been relative to the S&P 500 in more than a decade.

“Relative to the S&P 500, the Aristocrats currently trade at roughly 80% of the market’s P/E valuation. This is the cheapest level the Aristocrats have traded since March 31, 2010,” adds Kirwan. “The Aristocrats went on to outperform the S&P 500 over the subsequent 1-, 3-, and 5-year periods, indicating that today’s margin of safety may be an opportune entry point.”

That jibes with recent commentary from other market observers noting that, relative to historical norms, the quality factor is currently inexpensive.

As the economic cycle moves from recovery to expansion, investors often discard many of the junkier stocks that led on the way up in favor of quality fare. Should that scenario play out again, NOBL stands to benefit due to its mix of quality income-oriented names.

For more on income strategies, visit our Retirement Income 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.