The market has been volatile so far in 2022, but these safe dividend stocks could provide stability for investors.
Turmoil in the stock market has many investors looking for
ways to manage risk. If your goal is safety and reliable income, a great
starting point is the Dividend Aristocrats, a group of high-quality S&P 500
stocks known for delivering at least 25 straight years of dividend growth.
A dependable dividend can also have a significantly positive
impact on stock performance since these payouts typically account for roughly
one-third of total annual return, according to S&P Dow Jones Indices.
Equally as important, the increasing payouts from the
Dividend Aristocrats have not come at the expense of an attractive yield. These
stocks have consistently delivered, with yields averaging 2.5% over the past 24
years versus a 1.8% yield for the S&P 500.
The potent combination of consistency and rising dividends
have helped the Dividend Aristocrats outperform the broader S&P 500
benchmarks over long periods with lower volatility.
One measure that captures the downside protection provided
by these stocks is beta, which calculates an individual stock's volatility
versus the overall market. Since 1990, the average beta for the Dividend
Aristocrats has ranged around 0.8. Any beta below 1.0 indicates a stock that is
less volatile than the S&P 500.
The calming effect of lower beta is most apparent during
periods of stock market decline. Over the past 40 years, the Dividend
Aristocrats have performed better than the S&P 500 69.3% of the time during
market downturns and 43.4% of the time during market upticks.
Here, we look at five Dividend Aristocrats with betas below
1.0. Each of the safe dividend stocks featured here offer investors solid
downside protection and provide an exceptional dose of stability with reliably
rising income. Continue reading …
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