This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

ProShares S&P 500 Aristocrats ETF Should Deliver Steady Returns

Stocks in this article: NOBL VIG SDY

NEW YORK ( /TheStreet ) -- Conservative investors have good reason to consider ProShares S&P 500 Aristocrats (NOBL), a new passive exchange-traded fund.

To win a place in the S&P fund, a company must have raised its dividend for 25 consecutive years. Businesses that have passed the test tend to have steadily growing earnings, strong balance sheets and a corporate culture that is committed to raising dividends.

Since it began operating in 2005, the S&P 500 Dividend Aristocrats benchmark has been closely followed by institutional money managers who are searching for reliable stocks.

Many of the 54 stocks in the index are so consistent that they maintained strong profit margins during the financial crisis. Familiar names on the list include 3M (MMM), Coca-Cola (KO) and Johnson & Johnson (JNJ).

Once they earn a spot in the index, stocks tend to stay there for years. But turnover does occur when companies hit a rough patch and cut their dividends. After the turmoil of 2008, a number of banks fell off the list, including Bank of America (BAC) and KeyCorp (KEY).

Postage meter maker Pitney Bowes (PBI), a longtime aristocrat, cut its dividend this year. The meter business has suffered as old-fashioned mail has been replaced by electronic communications. Companies that recently recorded 25 years of growth and joined the list include AT&T (T), Colgate-Palmolive (CL), and mutual fund provider T. Rowe Price (TROW).

The dividend aristocrats tend to do particularly well during downturns when investors seek safety. But in strong rallies, the blue-chips often lag a bit as confident shareholders race to buy riskier choices. In the turmoil of 2008, the aristocrat index lost 27%, compared to a decline of 37% for the S&P 500. When markets rebounded in 2009, the aristocrats gained 26%, trailing the S&P 500 by a percentage point. During the past five years, the aristocrats returned 21% annually, compared to 18% for the S&P 500.

Will the aristocrats continue outperforming in the future? That is hard to know. But the reason to buy the ProShares ETF is not to obtain outperformance. Instead, investors should consider the aristocrats as a way to own high-quality dividend payers that are likely to protect principal in downturns.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs