Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Dividend Aristocrats' Etiquette Lesson for Apple

On the back of yesterday's Cyprus-inspired losses, stocks opened slightly higher this morning, with the S&P 500 (SNPINDEX: ^GSPC  ) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI  ) up 0.23% and 0.32%, respectively, at 10:15 a.m. EST.

Dividends pay off
Yesterday's Cypriot flu roiled global markets with a bout of "risk on," but at least one group was less volatile than the broad market: high-quality dividend shares. In fact, this group has been beating the market this year -- in some cases (depending on how you select your dividend payers) by a wide margin.

The following chart shows the year-to-date performance of three dividend-focused ETFs -- the First Trust Morningstar Dividend Leaders Index Fund, the SPDR S&P Dividend ETF (NYSEMKT: SDY  ) , and the Vanguard Dividend Appreciation ETF (NYSEMKT: VIG  ) -- relative to that of the S&P 500:

FDL Chart

FDL data by YCharts.

All three ETFs are beating the market. Furthermore, it's the stalwart dividend engines -- those with the longest, most consistent track records of dividend increases -- that have posted the greatest margin of outperformance. (Incidentally, the ranking of performance is the same over the past 12 months.)

Indeed, the SPDR S&P Dividend ETF tracks the S&P High Yield Dividend Aristocrats index, which contains companies drawn from the S&P 1500 that that have raised dividends annually over a minimum 20-year period -- a remarkable achievement. Surprisingly, only two of the SPDR ETF's top 10 holdings are Dow components: AT&T and Johnson & Johnson.

That ought to be a lesson to cash-heavy technology companies -- most prominent among them Apple (NASDAQ: AAPL  ) . While it will be long time before the maker of the iPad can be considered for inclusion in the Dividend Aristocrats Index (Apple declared its first dividend in 16 years in 2012), a healthy increase in its dividend could endear it to shareholders both old and new and help reverse the negative sentiment that has brutalized the shares since last September. At 2.4%, Apple's dividend yield is already above that of the S&P 500, but it can do better yet, which would give it more price-appreciation potential for it to square the two yields.

Is Apple worth your money?
There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons both to buy and to sell Apple, as well as what opportunities remain for the company (and your portfolio) going forward. To get instant access to his latest thoughts on Apple, simply click here now.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2320403, ~/Articles/ArticleHandler.aspx, 9/30/2016 11:17:39 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,272.27 128.82 0.71%
S&P 500 2,166.46 15.33 0.71%
NASD 5,300.10 30.95 0.59%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 11:02 AM
^DJI $18272.27 Up +128.82 +0.71%
^GSPC $2166.45 Up +15.32 +0.71%
S&P 500 INDEX CAPS Rating: No stars
AAPL $112.69 Up +0.51 +0.45%
Apple CAPS Rating: ****
SDY $84.21 Up +0.40 +0.48%
SPDR S and P Divid… CAPS Rating: *****
VIG $83.74 Up +0.43 +0.52%
Vanguard Dividend… CAPS Rating: ****