dkco

Dividend Aristocrats Will Continue to Outperform

Geoff
A quick skim of some of the characteristics of your simulation, beta of about 0.60 and equal weighted positions of the dividend aristocrats would indeed predict outperformance of the cap-weighted S&P 500 over the period when it fell 25%. Equal wighted stocks significantly outperformed cap-weighted during the time, and a portfolio with a beta of 0.6 should roughly fall 60% of the amount of the market (and rise only 60%). 60% of -25% is -15%. So, the combination of the portfolio beta and equal weightedness is the primary explanation for the dividend portfolio's performance, not what stocks they are, or, even that they pay dividends. A comparable analysis would hold for any basket of stocks, dividend paying or not, with a portfolio beta of 0.60. I know, most low beta stocks pay dividends, but not all, and not all div-payers are financials.