Dividend Growth Investing
Mid Caps: Hitting the Sweetest Spot With Dividend Aristocrats
Why are mid caps the sweet spot?
Mid-cap equities are commonly referred to as the “sweet spot” between the lower risk of large-cap stocks and the greater potential of small caps. Mid caps have even outperformed both large and small caps over time. But filtering for consistent dividend growth may make that mid-cap sweet spot even sweeter.
Selectivity is the key to smart mid-cap investing
Companies that consistently grow their dividends tend to be high quality, with strong fundamentals, long histories of profit and growth, and generally stable earnings. And we know companies that grew their dividends have outperformed, with lower volatility. Selecting companies with the longest track records of dividend growth identifies a very elite group of high quality
mid-cap dividend growers.
S&P MidCap 400 stocks have returned 13.68% versus 13.12% for the large-cap S&P 500 and 11.97% for the small-cap Russell 2000, based on annualized total returns for the 10-year period ending 12/31/18 (source: Morningstar). Dividend growth stock performance and volatility were analyzed by Ned Davis Research, based on Russell 3000 stocks from 1/31/87-12/31/18. Past performance does not guarantee future results. If there are not enough stocks meeting dividend growth requirements, or if sector caps are breached, the index will include companies with shorter dividend growth histories.
For illustrative purposes only. Click here for fund performance.
Performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than the original cost. Shares are bought and sold at market price (not NAV) and are not individually redeemed from the fund. Market price returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. ET (when NAV is normally determined for most funds) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Current performance may be lower or higher than the performance quoted. Standardized returns and performance data current to the most recent month end, see Performance. Index information does not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
The Takeaway |
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If you're looking for high quality mid-cap stocks, consider a dividend growth strategy. ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) is the only ETF designed to track the S&P MidCap 400 Dividend Aristocrats Index, which identifies highly select companies in the S&P MidCap 400 with at least 15 consecutive years of dividend growth. Since inception, REGL and its index have outperformed the S&P MidCap 400, with lower volatility. |