This Day On The Street
Continue to site
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

ProShares S&P 500 Aristocrats ETF Should Deliver Steady Returns

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).

[Read: <a target="blank" data-add-tracking="true" href=""><em>Can These Hot Passive ETFs Keep Topping the Benchmarks?</em></a>]

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 The meter business has suffered as old-fashioned mail has been replaced by electronic communications.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.

[Read: <a target="blank" data-add-tracking="true" href=""><em>When Mutual Funds Are Cheaper Than ETFs</em></a>]

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
NOBL $50.33 0.00%
SDY $78.24 0.00%
VIG $79.39 0.00%
AAPL $117.81 0.00%
FB $105.45 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs