For two decades, the S&P 500^® Dividend Aristocrats^® has been holding its constituents to a high standard, requiring them to increase dividends for at least 25 consecutive years. This simple yet effective requirement has stood the test of time, establishing the index as one of the most recognized global dividend benchmarks. In honor of this anniversary, this blog will examine the index’s robust live performance, defensive characteristics and quality attributes as we celebrate this significant milestone.

Risk-Adjusted Outperformance

Exhibit 1 illustrates that the S&P 500 Dividend Aristocrats posted an annualized return of 10.23% over the 20-year period since its launch, aligning closely with benchmark performance. However, its annualized volatility of 14.34% during this timeframe was notably lower than that of the benchmark, leading to a risk-adjusted return of 0.73. Additionally, the average dividend yield for the index was 2.54%, surpassing the S&P 500’s yield of 1.89% and the S&P 500 Equal Weight’s yield of 1.85%.

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Dividend Growth That Preserved Purchasing Power

Exhibit 2 shows that the S&P 500 Dividend Aristocrats has preserved purchasing power over the long-term by comparing the dividend growth rate to the Consumer Price Index (CPI) rate. Over the 20-year live period, the S&P 500 Dividend Aristocrats achieved an annualized dividend growth rate of 8.1%, which is more than three times the 2.6% CPI rate for the same period.

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Defensive Characteristics

Exhibit 3 shows the consistent downside protection that the S&P 500 Dividend Aristocrats has historically provided during market drawdowns, with average drawdowns materially lower than those of the benchmark. Most recently, during the tariff-related drawdowns, the index outperformed The 500™ and S&P 500 Equal Weight Index by 8.2% and 5.4%, respectively.

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Exhibit 4 illustrates the performance of the S&P 500 Dividend Aristocrats relative to The 500 and the S&P 500 Equal Weight Index across various volatility environments. On average, the S&P 500 Dividend Aristocrats has significantly outperformed both benchmarks during periods of heightened market stress, specifically when VIX^® levels exceed 20.

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Higher Quality Constituents

Highly profitable companies are typically better positioned to consistently increase dividends for shareholders over the long term, even in fluctuating economic conditions. As illustrated in Exhibit 5, constituents of the S&P 500 Dividend Aristocrats demonstrated superior profitability, with an average return on equity (ROE) of 21.4%, compared to 17.0% for the S&P 500 Equal Weight Index.

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Conclusion

Even with 20 years of noteworthy performance under its belt, the S&P 500 Dividend Aristocrats is still relatively young compared to some of its constituents. Nonetheless, this milestone is significant for a dividend index and deserves celebration. We invite you to explore this standout index further in our paper, “Celebrating 20 Years of S&P 500^® Dividend Aristocrats^® with 20 Fun Facts.”

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