Contact3 Reasons to Consider Dividend Growth Today
April 25, 2023Dividends contribute to returns significantly
Since 1930 dividends on average have accounted for 59% of the total return of equities. Notably, the last decade has looked different with price returns driving the bulk of equity total returns. We believe we are entering a new environment where dividends will play an increasingly important role in equity returns.
Historical S&P Dividend Contribution to Total Return |
|||||
|---|---|---|---|---|---|
|
Price Pct. Change1 |
Dividend Contribution |
Total Return |
Dividends Pct of TR2 |
Avg. Payout Ratio3 |
|
|
1930s |
-41.9% |
56.0% |
14.1% |
100.0 |
90.1 |
|
1940s |
34.5% |
100.1% |
134.6% |
74.4 |
59.4 |
|
1950s |
257.3% |
180.3% |
437.7% |
41.2 |
54.6 |
|
1960s |
53.7% |
54.2% |
107.9% |
50.2 |
56.0 |
|
1970s |
17.2% |
59.1% |
76.4% |
77.4 |
45.5 |
|
1980s |
227.4% |
143.1% |
370.5% |
38.6 |
48.6 |
|
1990s |
315.7% |
115.7% |
431.5% |
26.8 |
47.6 |
|
2000s |
-24.1% |
15.0% |
-9.1% |
100.0 |
35.3 |
|
2010s |
189.7% |
66.9% |
256.7% |
26.1 |
35.2 |
|
2020s |
18.8% |
5.9% |
24.8% |
24.0 |
37.0 |
|
Average |
114.4% |
87.8% |
202.2% |
59.4 |
52.5 |
|
Source: Strategas Research Partners as of 12/31/2022 |
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Inflation hedging
Dividend growth strategies have historically consistently compounded dividends at a higher rate than inflation.
NASDAQ US Dividend Achievers Select Index Rolling 12 Month Dividend Growth vs US CPI Year over Year4
Jan 2019-Mar 2023 (monthly)
Source: FactSet
4. The Consumer Price Index measures the overall change in consumer prices based on a representative basket of goods and services over time.
5. Rolling 12-month dividend growth refers to the percentage increase in a company's dividend payments over the past 12 months, updated on a rolling basis.
Income stability
Dividend growth strategies, as shown through the NASDAQ US Dividend Achievers Index which incepted 8 years ago, have demonstrated a yield advantage to the S&P 500, and less volatility of yield than the US 10YR Treasury.
NASDAQ US Dividend Achievers Select Index & S&P 500 – Equity Style Factor Dividend Yield vs US 10YR Treasury Yield
(Mar 2015 - Mar 2023, Monthly)
Source: Morningstar Direct
| Standard Deviation of Yield6 | |
| NASDAQ US Div Achievers Select Index | 0.19% |
| S&P 500 Index | 0.28% |
| US 10YR Treasury | 0.80% |
|
6. The standard deviation of yield is a statistical measure that shows the degree of variation or dispersion of a set of yield data around its mean. |
|
Discover Distinctive Active ETFs with Harbor Capital Advisors
Consider a dividend growth strategy with a solid record for yield - the Harbor Dividend Growth Leaders ETF (GDIV).
Get to know GDIV: HarborCapital.com/GDIV
Harbor Capital Advisors
Harbor Capital Advisors is an asset manager known for curating an intentionally select suite of active ETFs from boutique managers. Advisors looking for distinct and differentiated investment options for their clients’ portfolios often connect with our passionate obsession to find what we believe to be the best – bold solutions that have the potential to produce compelling, risk-adjusted returns. For more information, visit www.harborcapital.com.
(866) 313-5549 (Institutional Service Desk) | HarborCapital.com | info@HarborCapital.com | Find your Sales Rep
Important Information
Investors should carefully consider the investment objectives, risks, charges and expenses of a Harbor fund before investing. To obtain a summary prospectus or prospectus for this and other information, visit harborcapital.com or call 800-422-1050. Read it carefully before investing.
Investments involve risk including the possible loss of principal. There is no guarantee the investment objective of the Fund will be achieved. The Fund’s emphasis on dividend paying stocks involves the risk that such stocks may fall out of favor with investors and under-perform the market. There is no guarantee that a company will pay or continually increase its dividend. The Fund may invest in a limited number of companies or at times may be more heavily invested in particular sectors. As a result, the Fund’s performance may be more volatile, and the value of its shares may be especially sensitive to factors that specifically effect those sectors. The Fund may invest in foreign securities which may be more volatile and less liquid due to currency fluctuation, political instability, government sanctions, social and economic risks. Foreign currencies can decline in value and can adversely affect the dollar value of the fund.
Shares are bought and sold at market price not net asset value (NAV). Market price returns are based upon the closing composite market price and do not represent the returns you would receive if you traded shares at other times.
Investing involves risk, principal loss is possible. Unlike mutual funds, ETFs may trade at a premium or discount to their net asset value.
The views expressed herein may not be reflective of current opinions, are subject to change without prior notice, and should not be considered investment advice.
The Standard & Poor’s 500 index (S&P 500) is a stock market index that monitors the stocks of 500 stock companies in the U.S.
The NASDAQ US Dividend Achievers™ Select Index is comprised of a select group of securities with at least ten consecutive years of increasing annual regular dividend payments.
Foreside Fund Services, LLC is the Distributor of the Harbor ETFs.
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