2 “Dead Money” Dividend Aristocrats to Avoid (and 2 to Buy Instead)

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Wall Street’s supposedly elite group of stocks that have increased their annual payouts every year for at least a quarter-century – the “Dividend Aristocrats” – are peddled by advisers and pundits alike as supreme plays for income portfolios. And sure, a select few of them are. We’ll discuss two later today.

But a whole lot more of them are simply “dead money.”

The ProShares S&P 500 Dividend Aristocrats ETF (NOBL), which invests in the whole lot of dividend royalty, yields 1.9% as I write this. Even a million dollars parked in this fund is generating less than $20,000 in investment income annually.…
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Sometimes it’s best to sell in May and just stay away. Especially when a firm’s dividend stream is being eaten alive by Amazon & Co.

The Wall Street Journal’s Mark Hulbert studied the “summer rally myth” last year – and concluded it is indeed a good time to sell:

“Over the past 60 years, the Dow Jones Industrial Average has produced an average monthly return of just 0.1% during these three summer months, compared with a 0.7% average for all other months.”

Worse, even skilled market timers don’t have much to work with. Hulbert found that over the past 60 years, rallies from June’s lows into highs over the next two months averaged 6.9% — the third-lowest such rally potential, behind (you guessed it) July and August.…
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About Author

Brett

Hi, I’m Brett Owens – and I’m a financial junkie. My “problem” started incollege, when I got a little dose of the stock market – man, was I hooked…in no time, I was reading the Wall Street Journal religously.

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