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Dividend Aristocrat Performance: April 2020

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  • Components of the S&P 500 that have paid steadily increasing dividends for at least 25 years have outperformed the broader market over time.
  • This article demonstrates that historic outperformance and lists the current Dividend Aristocrat constituents and their recent returns.
  • While the Dividend Aristocrats have outperformed in the last six down years for the broad market, the strategy's relative underperformance this year continued in April.
  • At +10.6%, the Dividend Aristocrats had their best monthly performance since April 2009, but still lagged the S&P 500.
  • By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to suss out relative bargains.

Dating back to at least 1990, March 2020 was the worst monthly performance for the Dividend Aristocrats (-13.6%). April 2020 (+10.6%) was the best monthly performance since April 2009 (+12.2%) during the early recovery period from the Financial Crisis. While the strategy had its best return in eleven years, it still lagged the S&P 500 (+12.8%), which had its best month since January 1987. It has been quite a two-month move for this strategy and markets broadly.

Historically, the Dividend Aristocrats (BATS:NOBL) have collectively offered higher total returns - outperforming the S&P 500 (SPY) in each of the past six down years for the broad market - while generating better upside, a nearly 2% higher annual total return over our thirty year sample period. In the unique pandemic-induced correction in 2020, the Dividend Aristocrats performed worse in the downturn and have lagged in the recovery.

Dividend Aristocrats During 2020Source: Bloomberg

In the table below, the list of the 64 current Dividend Aristocrat constituents is sorted descending by indicated dividend yield, and lists total returns, including reinvested dividends, over trailing 1-, 3-, 6-, and 12-month periods. Performance data is through the end of trading in April. For purposes of this article, I have excluded recent United Technologies spin-offs Carrier Global (CARR) and Otis Worldwide (OTIS).

Constituent-level Dividend Aristocrat performance in April 2020The next two charts contrast the very different monthly performance for the constituent-level holdings. In April, only five Dividend Aristocrats - Cincinnati Financial (CINF), Walgreens Boots Alliance (WBA), Chubb (CB), Becton Dickinson (BDX), and General Dynamics (GD) - posted negative total returns.

Distribution of April returns for the Dividend AristocratsWhile in March, only five companies had posted positive total returns - Hormel (HRL), Clorox (CLX), WalMart (WMT), Abbott Labbs (ABT), and Walgreens Boots Alliance.

Performance of Dividend Aristocrats in March 2020

Notable takeaway from April's performance:

  • In this public health crisis-driven economic correction that has spawned increased demand for remote work access and

This article was written by

Ploutos profile picture
Institutional investment manager authoring on a variety of topics that pique my interest, and could further discourse in this online community. I hold an MBA from the University of Chicago, and have earned the CFA designation. My articles may contain statements and projections that are forward-looking in nature, and therefore inherently subject to numerous risks, uncertainties and assumptions. While my articles focus on generating long-term risk-adjusted returns, investment decisions necessarily involve the risk of loss of principal. Individual investor circumstances vary significantly, and information gleaned from my articles should be applied to your own unique investment situation, objectives, risk tolerance, and investment horizon.

Analyst’s Disclosure: I am/we are long NOBl, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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