Exchange Traded Funds (ETFs)

Tapping into These ‘Noble’ Stocks

As inflation continues to march on without an end in sight, investors are turning to dividend-paying stocks to provide some refuge from its effects.

While the status of dividend-paying stocks is always precarious — indeed, many dividends were reduced or eliminated after the recent economic downturn — there is a group of dividend-paying stocks whose members have a reputation for stability and consistency in their dividend payouts. Enter the Dividend Aristocrats.

To earn this coveted label, a stock in the S&P 500 must have increased its dividend annually for at least the past 25 consecutive years. There are 65 stocks currently on this list as of 2021, ranging from the unglamourous Federal Realty Investment Trust (NYSE: FRT) to the well-known Coca-Cola Co. (NYSE:KO). In addition, an exchange-traded fund known as the ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL) may show a way to tap into these stocks without having to own each one individually.

Like its parent list, the stocks in this exchange-traded fund’s (ETF) portfolio are selected from a list of companies on the S&P 500 that have increased their dividends for at least the past 25 consecutive years. All holdings are weighted equally, and each sector is limited to no more than 30% of the portfolio. At the same time, this methodology results in traditional dividend-paying sectors being overweighted in the portfolio.

Currently, the fund’s top holdings include Nucor Corporation (NYSE:NUE), Target Corporation (NYSE:TGT), Exxon Mobil Corporation (NYSE:XOM), Expeditors International of Washington, Inc. (NASDAQ:EXPD), West Pharmaceutical Services, Inc. (NYSE:WST), Franklin Resources, Inc. (NYSE:BEN), T. Rowe Price Group (NASDAQ: TROW) and the Cincinnati Financial Corporation (NASDAQ:CINF).

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This fund’s performance has been relatively strong, even when including the damage done by the COVID-19 pandemic. As of June 29, NOBL has been down 1.55% over the past month and up 4.57% for the past three months. It is currently up 14.19% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $8.6 billion in assets under management and has an expense ratio of 0.35%, making it less expensive to hold than many other ETFs.

While NOBL does provide an investor with a way to profit from the Dividend Aristocrats, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Successful Investing, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.