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.
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.
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".
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).
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.