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S&P 500 Dividend Aristocrats Learn more about how the fundamentals behind the strategy are driving its outperformance.
BY Smita Chirputkar

• Dividends play an important role in generating equity total return. Since 1926, dividends have contributed approximately one-third of total return for the S&P 500, while capital appreciations have contributed two-thirds. Therefore, sustainable dividend income and capital appreciation potential are important factors for total return expectations.


• Companies use stable and increasing dividends as a signal of confidence in their firm’s prospects, while market participants consider such track records as a sign of corporate maturity and balance sheet strength.


• The S&P 500 Dividend Aristocrats is designed to measure the performance of S&P 500 constituents that have followed a policy of increasing dividends every year for at least 25 consecutive years.


• The S&P 500 Dividend Aristocrats exhibits both capital growth and dividend income characteristics, as opposed to other strategies that are pure yield or pure capital-appreciation oriented.


• Across all of the time horizons measured, the S&P 500 Dividend Aristocrats exhibited higher returns with lower volatility compared with the S&P 500, resulting in higher Sharpe ratios.

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