During drawdowns of 7% or greater, high-quality companies have typically outperformed the S&P 500 Index over the last 10 years.
No single dividend yield category leads in all markets, and the top performers change over time. Investing broadly across a wide range of yields may help reduce risk in an overall portfolio.
With the likelihood of rising market volatility growing, investors could benefit with dividend growers.
Even when valuations are above their long-term average, dividend growers have provided a strong risk-return profile.
Focusing on company fundamentals may help identify dividend cutters, as well as opportunities for dividend growth.
Fed rate hikes aren't necessarily bad for equities. In fact, dividend growers have historically outperformed after rates rise.
In both up and down markets, dividend growers have outperformed 100% of the 10-year rolling time periods.
A low yield environment has led many investors to narrowly focus on high dividend yielders, but this can greatly reduce potential investment options to just 25% of the S&P 500 Index.
The recent trend has been to chase dividend yield. However, now may be the opportune time to look at the benefit of dividend growers compared to dividend yielders.
Looking for reasonably valued companies when market valuations are above their long-term average? Higher quality companies are currently trading at discount and exhibit low volatility.
History shows since 1926 that 91% of the time there are more than just 1 negative quarter over a 3-year time frame. Therefore, a focus on the downside may help preserve capital when the markets do turn negative.
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