Dividend Aristocrats: Income Stability and Growth Over Time

  • A review and performance recap of Durig’s highly successful Dividend Aristocrats Portfolio.
  • Lifetime Return of 9.44%.
  • Durig’s Dividend Aristocrats Portfolio has an average dividend yield of 3.51%, more than twice the current rate of inflation.

A review and performance recap of Durig’s highly successful Dividend Aristocrats Portfolio that also compares the portfolio to another aristocratic dividend portfolio. The Dividend Aristocrats Portfolio was also designed with income stability in mind, maintaining investment focus on only higher quality blue chip companies known as “Aristocrats.”

(all performance reported net of fee, as of 10-18-19)

October Performance Highlights

  • Average Dividend Yield of 3.51%
  • Lifetime return of 9.44%
  • Excess Return of 3.27% (vs. benchmark)*
  • Alpha of 7.95 (vs. benchmark*)
  • Beta of 0.18 (vs. benchmark*)

What makes an “Aristocrat”?

Aristocrats in the investment world are simply are blue chip companies with at least 25 years of increasing the dividend paid to shareholders each year.

The length of time necessary for a company to attain this title generally signals to investors that the business is stable enough to generate consistent earnings, and is able to provide both income and steady levels of growth over time. In fact, the title is so prestigious that only 53 companies currently hold the Aristocrat title, and are generally thought to be one of the lowest risk stock investments available.

Durig’s Dividend Aristocrats vs the Competition (ETF:KNG)

With so many Income Portfolios available to investors these days, it is worth shopping around for the one that fits your investment situation the best.  Below, we benchmark Durig’s Dividend Aristocrats Portfolio to another well known Income Portfolio, the CBOE Vest Dividend Aristocrat S&P 500 Target Income ETF (KNG).

Fee Comparison

Fee’s and portfolio expenses can deeply impact investor returns. Durig’s All-in Management Fee is  0.50%, while KNG’s Fee / Expense Ratio is set to a whopping 0.75%. Over the years, Durig has created the equation that should be employed in every model:

Higher Returns + Low Fees = Higher Net Returns to Clients

Structure & Allocation

While KNG’s portfolio contains more positions (about 50) vs. Durig’s 20, KNG has significantly overweight the positions involved in consumer cyclicals and industrial stocks making up about 47% of the portfolio holdings- this is less of a concern  in times of economic prosperity and certainty in American Manufacturing where one may expect strong growth in these sectors.

Unfortunately, this is not the environment in which investors currently find themselves.  The U.S./ China trade war has created uncertainty in trade across the board, including consumer goods and industrials, which could bode poorly for portfolios such as KNG’s which are heavily invested in one or two market segments should the situation become further unraveled.

On the other hand, Durig’s Dividend Aristocrats Portfolio’s holdings are spread across many issuers and industries, employing equal weighting to minimize over-exposure to any one market sector, allowing for a smoother and less bumpy experience for the investor.

Why Complicate?

Whereas KNG attempts to gain further performance by participating in short call options, Durig’s Portfolio relies on the simplicity of its approach to generate historically consistent returns, and believes that less moving parts means fewer potential points of failure. In this way, Durig believes that it has designed a portfolio that should not only grow income over time in a manner that should help to repeat these benefits.

Dividends that Keep Pace with Inflation

Because Dividend Aristocrats must increase their dividend each year to retain the Aristocrat designation the distributions to shareholders also increase, helping investors to keep pace with the rate of inflation (which now sits at 1.5%).

Durig’s Dividend Aristocrats Portfolio has an average dividend yield of 3.51%, more than twice the current rate of inflation.

Holding a portfolio of assets that are able to maintain, and even possibly outpace the rate of inflation through their dividends paid to shareholders are an excellent method for investors to stabilize their incomes while also participating in the growth of some of the most reputable and shareholder-focused blue chip stocks of the S&P 500.

Take Advantage of Tax Advantages

Participating in Durig’s Dividend Aristocrat Portfolio is even more beneficial in tax advantaged retirement accounts because neither capital gains nor income are taxed.

This is extremely beneficial as it allows investors to grow their portfolio in a tax-free environment until normal income tax is applied when the account owner reaches distribution age.

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Summary

For investors that seek increased income stability in a portfolio designed to grow income over time, with less volatility and more peace of mind, Durig’s Dividend Aristocrats Portfolio appears to be an outstanding choice.

For More Information

If you have any questions or would like further information Durig’s Dividend Aristocrats Portfolio, please call Durig at (971) 327-8847, or email us at info@durig.com.

Durig Capital has several high yield portfolio strategies available, click below to learn more.

Fixed Income 2 – FX2
Dividend Aristocrats
Income Aristocrats
Dogs of The Dow
Dogs of The S&P 500

TD Ameritrade Advisors

Durig is now offering its highly successful Fixed Income 2 (FX2) Portfolio, the Dividend Aristocrats 40 Portfolio, and the Income Aristocrats Portfolio to clients of other Registered Investment Advisors through segregated accounts at TD Ameritrade Institutional. Please ask us to learn how this might work for you and your current advisor.

Disclaimer: Past performance is no indication of future success. Any performance shown is this publication is as of 10-21-19. * The Primary Benchmark used is S&P 500 TR Idx. The high yield strategies presented in this review by Durig Capital may not be suitable for all investors.  This is not investment advice from Durig Capital, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision.

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Dividend Aristocrats

The stated goal for this strategy is to introduce investors to the high quality dividends of blue-chip equity, all contained within a well diversified, individualized, and very low cost portfolio, with lower volatility. Over time, this strategy is designed to produce both growth of principal while also gradually growing tax advantaged dividend income.
http://aristocrats1.com

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