Dividend Aristocrats may shine again if the Fed causes another bad year for the stock market

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ETFs holding the Dividend Aristocrats fared well during the down market in 2022, and still-rising interest rates may set up a similar environment for investors.

Following a painful 2022 for the S&P 500, when the heavily weighted technology and communications sectors led a double-digit decline, this year’s recovery has been breathtaking. But lately, investors have been nervous and those sectors have been pulling back as long-term interest rates have risen, despite the Federal Reserve’s pause in raising short-term rates. Some professional investors are worried that rising long-term rates could push the broad stock market down again.

To the right of the chart you can see the recent action for the broad market has been weak, with sharp declines for the two sectors. Highest-yielding Dividend Aristocrats A dozen Dividend Aristocrats have current dividend yields of 5.00% or higher:Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

For a second screen, let’s consider dividend increases by looking at compound annual growth rates for dividend payouts over the past five years. Let’s begin with stocks whose yields were at least 1.5% as of Sept. 27, 2018.

 

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