Dividend Aristocrats ETF


Dividend Aristocrats ETF products track a basket of S&P 500 stocks that have increased dividends for at least 25 consecutive years.


Learn more about the Dividend Aristocrats and download the data for the full Dividend Aristocrats List. If you have a large portfolio then you may find the most cost effective way to purchase this basket of stocks is best served by purchasing the securities individually, rather than paying a 0.35% MER (Management Expense Ratio). However, the headache of re-balancing and tracking additions and disposals is something many investors do not want, and it can be expensive, which is exactly why the Dividend Aristocrats ETF was created.

Navigate this topic:

  1. Difference Between Dividend Aristocrats ETFs and Indices
  2. Dividend Aristocrats ETF Comparison
  3. ProShares Dividend Aristocrats Index Overview
  4. ProShares Dividend Aristocrats Index Performance
  5. S&P High Yield Dividend Aristocrats Index Overview
  6. S&P High Yield Dividend Aristocrats Index Performance
  7. More Resources

Difference between Dividend Aristocrats ETFs and Indices:

An index is a theoretical composition of stocks that make up a certain group, in this case Dividend Aristocrats. The index does not actually hold the stocks and is cannot be invested in by itself, which is where ETF’s come into play. The ETF seeks to mimic the performance of the index, and can be invested in. This is the primary difference between the index and ETF, only the Dividend Aristocrats ETF can be invested in, but it seeks to match the performance of the Dividend Aristocrats Index.

Since the ETF tracks the index the performance of the two will not always be the same, additionally, the ETF has management fees that create drag on performance. Nonetheless, over time the ETF does do a fairly good job of tracking the underlying index.

Dividend Aristocrats ETF Comparison

If you want to own a basket of good dividend stocks with a solid history of consecutive dividend increases using an ETF is an efficient way to do this. There are two choices of dividend aristocrats ETF’s with a few key differences:

 

NOBL Aristocrats ETF SDY Aristocrats ETF
Name ProShares S&P500 Dividend Aristocrats ETF SPDR S&P Dividend ETF
Ticker NYSEARCA:NOBL NYSEARCA:SDY
Selection Set S&P 500 S&P 1500
Inception Date 10/9/2013 11/8/2005
Gross Expense Ratio 0.58% 0.35%
Assets Under Management $2.1 billion $14.7 billion
Performance Since Inception 13.99% 8.89%
Yield 1.78% 2.35%
Number of Holdings 50 109
P/E Ratio 21x 22x
Website Website

Based on the statistics above, what we notice most is how much better the NOBL index has done since inception, now this is somewhat biased as the SDY index has been in existence for longer and this includes during the global financial crisis which significantly impacts its results since inception. Looking at the performance of the two dividend aristocrats ETFs since NOBL’s inception we can see that it still significantly outperforms the SDY index. You get a smaller yield, but a higher quality basket of stocks.

Aristocrats ETF Performance comparison

Source: Google Finance.

ProShares Dividend Aristocrats Index Overview:

The ProShares Index tracks the S&P 500 Dividend Aristocrats Index and can be found under the ticker symbol NOBL, it has $2.4B of assets under management and trades about 380,000 units per day. The NOBL ETF has a minimal expense ratio of 0.35%, which is consistent with other similar active ETF’s, but likely much cheaper than purchasing this basket of stocks on your own, after all buying and maintaining a portfolio of 50 Dividend Aristocrats is not realistic for most investors. This index has a 1.8% dividend yield and a beta of 0.92, indicating it largely tracks the broader market.

The NOBL ETF focuses only on Dividend Aristocrats with at least 25 consecutive years of dividend increases. It attempts to capture the historical outperformance that has been seen by dividend growers over time, while outperforming the S&P 500, and at a lower volatility.

Dividend Aristocrats ETF Sector Distribution

Source: ProShares.

The NOBL Aristocrats index is heavily weighted towards consumer staples (27%), Industrials (16%), and Health Care (14%). It differs from many other large cap dividend ETF’s in that financials at only 12% comprise a relatively small portion of the index.

Specifically, the top 10 companies held by this dividend aristocrats ETF are below:

Top 10 ETF Holdings Weight
McCormick & Co. 2.3%
Cincinnati Financial Corp. 2.3%
AT&T Inc. 2.2%
C. R. Bard Inc. 2.2%
The Clorox Co. 2.2%
Consolidated Edison Inc. 2.2%
Sysco Corp. 2.2%
Medtronic PLC 2.1%
Cintas Corp. 2.1%
Kimberly-Clark Corp. 2.1%

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ProShares Dividend Aristocrats Index Performance:

The chart below shows the performance since the NOBL Dividend Aristocrats ETF began, which has shown strong out-performance against the S&P, particularly since the start of 2016. We also note that it has tracked the index very well, but is slightly lower, which we would expect due to the inevitable drag created by the management expense. This ETF has only existed since the end of 2013, but if you had invested $10,000 in the ProShares S&P 500 Dividend Aristocrats ETF you would now have about $14,500 compared to only $13,500 if you had purchased the broader S&P 500 index.

Dividend Aristocrats ETF Performance

Source: ProShares.

S&P High Yield Dividend Aristocrats Index (SDY) Overview:

The SDY Aristocrats ETF seeks to replicated the performance of the highest dividend yielding stocks in the S&P 1500 Index. The main criteria for member selection is to pick companies that have had a history of consecutive dividend increases for more than 20 years.

This ETF has been around since the end of 2005 giving it a longer history than the NOBL ETF. It carries a 0.35% Expense Ratio, similar to the NOBL ETF. The SDY etf has a yield of 2.35%, which includes the 0.35% expense ratio. The ETF also carries a forward P/E of 20x which makes it somewhat expensive. Finally, there are 107 stocks currently held by the index, giving it a much wider coverage than the NOBL ETF, the reason is that the SDY index has a much broader selection set to pick its securities from as it pulls from the S&P 1500 compared to NOBL who uses only stocks in the S&P 500.

The largest portion of the SDY Dividend Aristocrats ETF are financials as 24%, industrials at 16%, and consumer staples at 13%.

Stocks in the SDY Dividend Aristocrats ETF

Source: State Street.

Specifically, the top 10 companies held by this dividend aristocrats ETF are below: 

Top 10 Holdings Weight
HCP Inc. 2.70%
People’s United Financial Inc. 1.94%
Caterpillar Inc. 1.73%
AT&T Inc. 1.73%
Chevron Corporation 1.61%
Old Republic International Corporation 1.52%
AbbVie Inc. 1.52%
International Business Machines Corporation 1.47%
Cullen/Frost Bankers Inc. 1.45%
Emerson Electric Co. 1.44%

S&P High Yield Dividend Aristocrats Index (SDY) Performance:

The SDY has performed closely with its benchmark index, the S&P High Yield Dividend Aristocrats Index, the difference between the two would be the result of the MER which causes drag on the SDY ETF compared to the underlying index.

SDY Dividend Aristocrats ETF performance

Source: State Street.

Additional resources to learn more about Dividend Aristocrats ETFs:

  1. Canadian Dividend Aristocrats
  2. S&P Dividend Aristocrats List
  3. ProShares aristocrats ETF
  4. State Street aristocrats ETF
  5. Wikipedia

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