How to Recession-Proof Your Portfolio With These 5 Dividend Aristocrats
NEW YORK (TheStreet) -- "Dividend aristocrats" have historically performed well during recessions. The Standard & Poor's Dividend Aristocrats index was down only 21.88% in 2008. For comparison, the S&P 500 index was down 37% in the same period.
The Dividend Aristocrat index is made up of stocks with 25 or more years of consecutive dividend increases. Stocks with a long history of dividend increases tend to have strong, stable cash flows and a history that shows they can weather economic downturns.
Courtesy of S&P 500 Dividend Aristrcrats Fact SheetDividend Aristocrats with Smallest Losses in 2007 to 2009 Recession Not all Dividend Aristocrats are created equally. Some handle recessions much better than others. The 10 Dividend Aristocrats from 2007 with the lowest maximum drawdown (biggest loss from highest price to lowest price) from the beginning of 2007 to 2009 are shown below. The maximum drawdown and returns for the SPDR S&P 500 ETF Trust (SPY) are shown as well for comparison.
McDonald's (MCD - Get Report) had the lowest overall maximum drawdown, at -21.65%. McDonald's was also the only Dividend Aristocrat to post positive returns in 2007, 2008, and 2009. The company had the highest return on the top 10 in 2007 as well. The success of McDonald's in this exceptionally bearish market shows the company did not only survive during the last recession, it thrived.
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