Dividend Stocks, Funds Outperforming S&P 500

By Todd Shriber, ETF Trends

When biotechnology, Internet and other momentum stocks were in favor during the first two months of this year, dividend payers lagged. Even with U.S. stocks recently hitting all-time highs, dividend payers are back to outperforming the S&P 500.

“We noted in an early March post that dividend payers in the S&P 500 Index were under performing the non payers by over 6% during the first two months of 2014. Near that same time the market was beginning a transition out of momentum and growth stocks into value oriented equities. As fate would have it, many dividend payers screen as value type stocks,” said Horan Capital Advisors.

“As a result, since the end of February, the dividend payers have significantly outperformed their non dividend paying counterparts in the S&P 500 Index. As the below table shows, the dividend payers are now outperforming the non payers by nearly 4%. This is a nearly a 10% swing in just three months.”

It is not just funds focusing on high-yield stocks that have been outpacing the broader market. Funds with varying approaches to income and investing have also been soaring. For example, the First Trust NASDAQ Technology Dividend Index Fund (TDIV) is up 9.7% since March 3rd.

The average payout increase from Apple, IBM, Cisco and Qualcomm this year is almost 14%. that does not include an increase from Microsoft, which usually delivers in the second half of the year. Microsoft’s last two dividend increases were 21.7% and 15%, respectively.

******

The D2 Capital Management Multi-Asset Income Portfolio is overweight in dividend funds.  One of its holdings is First Trust NASDAQ Technology Dividend Index Fund (TDIV).  Current yield on the portfolio is 5.18% and year to date the portfolio is up 9.56%.

Disclosure:  I own the D2 Capital Management Multi-Asset Income Portfolio

The views expressed here are that of myself or the cited individual or firm and do not constitute a recommendation, solicitation, or offer by myself, D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

 The Jacksonville Business Journal has ranked D2 Capital Management in the top 25 of Certified Financial Planners in Jacksonville.  The Firm is also a member of the Financial Planning Association of Northeast Florida, the Jacksonville Chamber of Commerce, the Southside Businessmen's Club, and the Beaches Business Association.