Dividend Growers vs. High Yielders In Down Markets
Dividend growth investing has long been a popular strategy for both income seekers and long-term growth investors. In the current market environment, dividend growth hasn't been rewarded as investors continue to focus on growth and tech. But long-term, the benefits have been undeniable.
During market declines, dividend aristocrats demonstrate clearly that they can limit downside risk.
During both down months and the worst-performing down months, dividend payers show that they capture less than 100% downside. The broad universe of high yielders displays modest benefits, but those that combine both high yield and long dividend growth histories can eliminate 30-40% of downside performance.
Moreover, the S&P 500 Dividend Aristocrat universe has shown itself to be about 10% less risky than the S&P 500 overall with particular risk reduction benefits during declining markets
Dividend growers don't outperform in all all environments, as we saw during the February/March bear market, but over the long-term, this remains a solid strategy.
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