When Dividends Shine

  • SumoMe

It really doesn’t require rocket science to do alright in the markets.  Now Lord knows it’s pretty easy to get wrapped up in “crunching numbers” (“Hi, my name is Jay”), but sometimes simple strategies can do reasonably well. Every once in a great while us “quantitative types” stop doing calculations long enough to look up and look around at “slightly less complex” methods.

Good thing too.

Consider the following strategy based on the S&P Dividend Aristocrats Index. This index focuses exclusively on companies in the S&P 500 that have grown dividends for at least 25 consecutive years.  The ETF ticker NOBL (ProShares S&P 500® Dividend Aristocrats ETF) tracks this index.

(See also Respect the Trend, But Beware)

Here is the “Non Rocket Science Related Dividend Strategy”:

*Hold the S&P Dividends Aristocrats Index during March, April, May, November and December.

*Hold Cash during all other months (for purposes of this test we will assume annual rate of interest of 1%)

Using monthly total return index data from the PEP Database by Callan Associates, the results appear in Figure 1.1Figure 1 – Growth of $1,000 using Jay’s Non-Rocket Science Related Dividend Strategy; 12/31/1989-6/30/2017

For the record:

*Average 12 months = +10.5%

*Median 12 months = +9.1%

*Standard Deviation of 12-month returns = 7.5%

*Worst 12 months = (-3.5%)

*Maximum Drawdown = (-6.6%)

(See also A Focus on the Trends in Stocks, Bonds and Gold)


Is this a “world beater, you can’t lose in the stock market” strategy?  Not at all (especially since there is no such thing).  But it does offer a place to start looking for someone looking for a relatively low volatility investment strategy.

Now if you will excuse me I have to get back to dividing the 3-day RSI by its own 10-day moving average.  I think I may be onto something.

Jay Kaeppel

Disclaimer:  The data presented herein were obtained from various third-party sources.  While I believe the data to be reliable, no representation is made as to, and no responsibility, warranty or liability is accepted for the accuracy or completeness of such information.  The information, opinions and ideas expressed herein are for informational and educational purposes only and do not constitute and should not be construed as investment advice, an advertisement or offering of investment advisory services, or an offer to sell or a solicitation to buy any security.

One thought on “When Dividends Shine

Comments are closed.