Dividend Aristocrat Performance: November 2020

Summary

• 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.
• In November, the Dividend Aristocrats posted a 11.99% total return, outperforming the broad S&P 500, which returned 10.95% after positive vaccine news.
• By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to suss out relative bargains.

November 2020 was the third consecutive month of relative gains for the Dividend Aristocrats (BATS:NOBL) versus the S&P 500 (SPY). Unlike September and October 2020, where the outperformance for the dividend growth strategy was in a down month for stocks broadly, the dividend growth strategy outperformed in November in a very strong month for stocks broadly. It was the best monthly return for the dividend growth strategy (+11.99%) since the early recovery from the Great Recession in April 2009 (+12.19%).

Source: Bloomberg

It has been a good three-month run for the strategy. After lagging early in the recovery due to the strategy's natural tech underweight, the dividend growth strategy has now slightly outperformed during the market recovery that started on March 23rd. Over longer time intervals, the strategy has tended to outperform in down markets and keep pace in recoveries, but 2020 - in a year of unusual activity - saw the strategy lag into the March lows and now slightly outpace the broad market in the subsequent recovery. The dividend growth strategy is still down on a relative basis versus the broad market, but now up about 7% on the year after November's strong rally.

Source: Bloomberg

Expanding this time horizon to the full three decade plus dataset for the dividend growth strategy, and it has outperformed by about 1.83% per annum in spite of the relative underperformance in 2020.

Source: Bloomberg

In the table below, the list of the 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.

Here are a couple of notable observations from this list:

• In the broad-based market rally in November all but 4 constituents - Lowe's (LOW), Clorox (CLX), Continental Edison (

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.