In July, the S&P 500 experienced a slight decline of 0.1%, while the Nasdaq fell by 3.2%. In contrast, dividend stocks performed better, with the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) gaining nearly 8% and the Vanguard Dividend Appreciation ETF (VIG) rising about 1%.
NOBL offers a dividend yield of 2.42% and a 0.35% expense ratio, while VIG has a yield of 1.54% and a low expense ratio of 0.04%. Michael Clarfeld from ClearBridge Investments emphasized the strong case for dividends in the current market climate, particularly as a hedge against inflation.
Investors are advised to focus on high-quality Dividend Aristocrats, which have a history of increasing payouts over the past 25 years, rather than solely on high-yield stocks that may indicate company distress. Among the Dividend Aristocrats, Albemarle, despite a 13% drop in July, has a potential upside of 63% according to analysts, with 58% rating it a buy.
Air Products and Chemicals offers a 2.5% yield and has a 17% upside, with 56% of analysts recommending it. Walmart, with a lower yield of 0.9%, has a significant upside of nearly 26% and is rated a buy by 67% of analysts, despite a recent disappointing earnings outlook. Overall, the performance of dividend stocks suggests they may be a safer investment choice during uncertain market conditions