Dividend Aristocrats in Action: Drawdowns and Rebounds
Quality Dividend Growth Equities
What's a valuable way to assess the performance of an investment strategy? By looking not only at how it performs when the market is up, but how it reacts to inevitable downturns. With that in mind, we looked at the market's worst drawdowns since the S&P 500® Dividend Aristocrats® Index's inception in 2005. Then we looked at subsequent performance when the market recovered.
Dividend Aristocrats typically outperformed in drawdowns—and rebounds
Here's what the data show about this group of companies, each of which has demonstrated an impressive 25+ consecutive years of dividend growth to be considered a Dividend Aristocrat. The first column shows the S&P 500's worst drops, starting with the fourth quarter of 2008. The second column shows how much the Dividend Aristocrats over or underperformed—in all but one instance, they outperformed.
Then, we track how the Dividend Aristocrats performed as the market rebounded. As the third column shows, these elite dividend growers outperformed the S&P 500 almost across the board one, three and five years after a given drawdown.
S&P 500 Dividend Aristocrats Index vs. S&P 500
Worst Drawdowns, and Subsequent Rebounds (May 2005 - December 2019)
Source: Morningstar. Index returns are for illustrative purposes only and do not represent actual fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results.
The takeaway: NOBL's strategy showed resiliency when markets declined
If you’re looking for high-quality large-cap stocks that have a demonstrated history of weathering market turbulence, consider ProShares S&P 500® Dividend Aristocrats ETF (NOBL). Many investors have come to expect outperformance of dividend growth strategies during periods of market stress. But perhaps even more impressive is that NOBL’s index outperformed the market in 11 of 13 subsequent periods from the index’s inception in 2005 to year end 2019.
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- See how the Dividend Aristocrats fared in the 2018 market downturn.
NOBL Performance
Month-End Total Returns as of 2/29/20
| 1 mo | 3 mo | 6 mo | YTD | 1 yr | 3 yr | 5 yr | 10 yr | Inception† | Inception Date | Exp. Ratio | Net Exp.1 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NAV | -8.80% | -9.48% | -2.41% | -11.17% | 2.59% | 8.27% | 7.87% | -- | 10.56% | 10/9/13 | 0.35% | 0.35% |
| Market Price | -8.63% | -9.40% | -2.23% | -11.01% | 2.76% | 8.33% | 7.89% | -- | 10.59% | 10/9/13 | 0.35% | 0.35% |
Quarter-End Total Returns as of 12/31/19
| 1 mo | 3 mo | 6 mo | YTD | 1 yr | 3 yr | 5 yr | 10 yr | Inception† | Inception Date | Exp. Ratio | Net Exp.1 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NAV | 1.91% | 6.28% | 10.16% | 27.45% | 27.45% | 14.37% | 10.86% | -- | 12.98% | 10/9/13 | 0.35% | 0.35% |
| Market Price | 1.81% | 6.22% | 10.16% | 27.40% | 27.40% | 14.24% | 10.83% | -- | 12.97% | 10/9/13 | 0.35% | 0.35% |
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.