This Dividend ETF Fell 6% in the 2022 Bear Market While the S&P 500 Dropped 19%
Long-term dividend growth stocks are great for providing downside portfolio protection. But understand the trade-offs before jumping in.
Overview
The ProShares S&P 500 Dividend Aristocrats ETF (NYSEMKT: NOBL) fell 6.5% in 2022. (Dividend Aristocrats® is a registered trademark of Standard & Poor’s Financial Services LLC.) The Vanguard S&P 500 ETF, by comparison, fell 18.2% during the same calendar year. In the worst year for the S&P 500 since 2008, investing in long-term dividend growth stocks saved investors from roughly two-thirds of the index's decline.
This isn't surprising behavior for Dividend Aristocrats® -- companies that have grown their annual dividend for at least 25 consecutive years. These tend to be more mature, defensive, cash flow-heavy businesses that, by their nature, are better built to withstand multiple market environments. Because they often offer products and services that consumers need regardless of whether or not the economy is in good shape, they can help mitigate downside risk in a portfolio.
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Originally published at www.fool.com.