Did The Dividend Aristocrats Survive The "Corona-Virus"-Week?
Seeking Alpha Analyst Since 2017
My friends call me often Mr.Dividend since I prefer dividend growth stocks for the long run and not "hot" stock driven by news. My website MoneyInvestExpert.com helps individual investors to find high quality dividend stocks for long-term holding. We use a 4 D's investment approach for success: Discipline, Diversification, Defensive and Dividends. Defensive Aristocrats finds the safest dividend growth stocks trading at undervalued prices using performance metrics combined with fundamentals.
Summary
- The Dividend Aristocrats are companies of the S&P 500 that have paid steadily increasing dividends for at least 25 years have outperformed the broader market over time.
- The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite all fell more than 10% last week, their biggest weekly declines since October 2008.
- Did the Dividend Aristocrats show their defensive character?
The "Corona-virus"-week
As coronavirus fears spread, U.S. equities were beaten down, the S&P 500 was down 8% in February. The S&P 500 is now down 13% from its peak on February 19th, entering correction territory. Especially in the last week of February the Dow fell more than 12% (+3,500 points) — its biggest weekly percentage loss since 2008. Also, the S&P 500 lost 11.5% last week, which is its worst weekly performance since the crisis. The Nasdaq showed a similar pattern.
The charts below display the Dow Jones (DJI) over the last year and last month, including the S&P 500 total return.
Dividend Aristocrats
The Dividend Aristocrats (NOBL) lost an -8.79% return in February. Year-to-date the performance is now -11.15% for the Dividend Aristocrats Index versus -8.27% for the S&P 500 index. The Dividend Aristocrats declined almost at the same rate as the index, not showing its "defensive play".
Source: moneyinvestexpert.com
Also, last week was in-sync with on average a decline of -11.30% for the aristocrats and -11.5% for the S&P 500. Below are the ten "best" dividend aristocrats for the worst week since 2008:
To complete the picture below also the ten laggards based on last week's performance:
Also, the seven new Dividend Aristocrats, added to the index in 2020, had a difficult week.
Due to the decline in share price the dividend yield has gone up for all stocks. There are now five stocks with a dividend yield of around 5%. Those stocks are AT&T (T), AbbVie (ABBV), Chevron (CVX), PBCT (PBCT) and Franklin Resources (BEN).
Final thoughts
The Dividend Aristocrats are the ‘best of the best’ dividend growth stocks and do have a long history of outperforming the market with lower volatility. The lower volatility should give investors a "peace of mind" but last week didn't show the defensive character of the Dividend Aristocrats. Investors and Emotions is typically not a good mix, so the advice is to stick to your investment plan, especially when it is based on dividend growth stocks for the long run.
Disclosure: I am/we are long NOBL.