The time has come for another ‘Article of Interest’ post.  The last one was roughly one month ago, so certainly you are ready for another, no?  This is now the 10th post in this series.

To recap the intent of this series… every now and then, when perusing investing or personal finance articles across the Internet, I come across what I call an ‘Article of Interest’, or ‘A of I’ for short.

I decided it might be helpful to share a link to the article in case some of my visitors would find it of interest as well.

In most cases, the article will focus on dividend-paying stocks or dividend growth investing (DGI).  However, other finance-related topics might be highlighted, too.

Now that we are up-to-speed, let’s see what this A of I is about…

 

Link Overview

Today’s link is for an article I came across over at MarketWatch.  It’s about 4 weeks old, but I had yet to come across it, and I thought it shared some interesting information, and that the insights drawn from the article are worthy of sharing.

It discusses how the Dividend Aristocrats (S&P 500 stocks that have increased their dividends payouts for 25 or more consecutive years) have weathered the recent environment created by the pandemic.  Not only from the standpoint of a potential dividend cut, but their price performance as well.

The article notes that there are 65 S&P 500 Dividend Aristocrats and states that none of them have cut their dividend during the pandemic.  Just what we expect, right?  However, it was in stark contrast to the remaining S&P 500 stocks that are not Aristocrats.

You’ll get to see all 65 Aristocrats listed by decreasing yield (yields as of late August), and shown their total returns through 8/21/2020.

Also, listed separately are 63 of the companies among the S&P 500 stocks that have already suspended or cut their dividend in 2020.

These 63 “cutters” are listed by increasing total returns (smaller negative numbers in most cases), and you’ll see their dividend yields (post suspension/cut) as well.

 

https://www.marketwatch.com/story/these-dividend-aristocrat-stocks-have-been-raising-their-dividends-for-decades-and-there-have-been-no-dividend-cuts-during-the-pandemic-2020-08-25?mod=mw_quote_news

 

A couple of things stood out to me as I read the article.

First, among the Aristocrats, the stocks with largest current yields showed distinctly poorer performance in 2020.  Granted, a declining stock price means a higher yield, but it was interesting how many stocks with the poorest returns had the higher current yields.  Surely, not all of the poor performers had high yields strictly due to bad performance in 2020, especially given that the worst total return was -38%.  I instead interpreted this as being those stocks with some of the higher yields going into the pandemic have fared most poorly in this environment.

In contrast, it was equally interesting to see all the stronger year-to-date returns from the Aristocrats with the lower yields.

Second, as you might expect, those S&P 500 non-Aristocrats that ended up suspending or cutting their dividend truly got a double whammy.  Not only is their yield all but gone in most cases, but the stock price has suffered immensely as well.  Just gander at the numbers… major stock carnage.

Happily, I found 18 of the listed Dividend Aristocrats to be in my Portfolio.  However, one of them, Exxon Mobil (XOM), I recently purged from my Portfolio in anticipation of an upcoming dividend cut.

Sadly, I had 2 of my stocks on the “cutters” list.  They were Wells Fargo & Co. (WFC) and The Walt Disney Co. (DIS).  I recently purged WFC from my Portfolio, but chose to hold onto DIS.

 

Can you claim more Aristocrats, and fewer S&P 500 cutters, in your portfolio than I found in mine?  If so, I suspect your portfolio has held up rather well during the pandemic.

 

I hope you find the article useful and/or enjoyable.  As always, please share your thoughts once you’ve had a chance to read the material.

See you next time…