PEP - 10 High-Yield Dividend Aristocrats Perfect For An Uncertain Market

2024-04-20 07:00:00 ET

Summary

• Volatility in the stock market is normal and healthy, with average yearly gains of 22% in positive years and average peak intra-year declines of -14%.
• Dividend aristocrats, which have lower volatility than the overall market, can be a good investment during market downturns.
• The ten lowest-volatility aristocrats offer a 3.1% average yield, a 50-year dividend growth streak, and an A-credit rating. Since 2007, they have fallen 50% less than the S&P during bear markets.
• They historically delivered 10% returns that analysts think will likely continue, along with 9% to 10% annual income growth.
• Consider adding some bonds and managed futures for those seeking even lower volatility. Low volatility + bonds/managed futures fell just 12% during the Great Recession, less than 25% of the S&P's decline and 72% less than a 60-40 retirement portfolio.

While volatility has been very low this year, it's starting to pick up again.

Don't get me wrong. The kinds of declines we've seen in US stocks and even dividend aristocrats are perfectly normal, healthy, and to be expected.

Why You Should Embrace Volatility As Normal And Healthy

You might be surprised to learn the following facts about US stocks.

• Stocks are up 75% in all years.
• Average yearly gain in a positive year: 22%
• Average year loss in a down year: 14%
• Average Peak intra-year decline: -14%

In other words, if you own stocks, and they go up, they go up more than 20% on average. And the average long-term returns have been over 10% per year....

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