“Aristocrat” stocks have decades-long track records of increasing their dividends. And they’ve held up better than their peers during market downturns. Don Kilbride used to think of dividend growth as simply an interesting financial concept. Since the crash, he’s come to see it as just about the most important arrow in a stock investor’s quiver. Investors have treasured dividend growers for ages, of course, and their recent performance has justified the love.
Since the beginning of 1999, the S&P 500 Dividend Aristocrats index—made up of companies that have increased their dividends for at least 25 consecutive years—has returned 314%, more than double the broader market. (Even with dividends excluded, they trounce the S&P 500.) But as the bull market wears on into its seventh year and a correction feels inevitable, many pros are noticing what Kilbride has—that aristocrats weather downturns far better than the average stock, falling less and recovering faster. After the financial crisis, the Aristocrats index returned to pre-crash price levels within two years, half the time it took the S&P 500. And after the dotcom bubble, the Aristocrats rebounded to pre-bust heights in 2001; it took the S&P 500 almost six years longer to regain its 2000 peak.
Source: Fortune
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