Investors in the city of New York, New York can track the performance of companies that have increased their dividends for at least 20 consecutive years through the S&P High Yield Dividend Aristocrats® index. This index not only offers potential for enhanced dividend income but also provides equity participation for investors seeking long-term growth.

A recent analysis highlighted that the dividend growth rate of the S&P High Yield Dividend Aristocrats has outpaced inflation from 2000 to 2023. By examining past macroeconomic cycles, it was found that the performance of the index varied across different economic regimes based on growth and inflation trends.

During periods of rising growth, equity markets tend to perform well, with growth style stocks showing strong outperformance. However, in the “Goldilocks Zone,” characterized by rising growth and falling inflation, the S&P High Yield Dividend Aristocrats, which leans towards value stocks, may underperform the market. This is due to its higher exposure to value stocks compared to growth stocks.

In contrast, during periods of slowing growth when markets are declining, the S&P High Yield Dividend Aristocrats tend to offer downside protection as the index focuses on higher quality companies with strong dividend track records. In environments with both slowing growth and rising inflation, the index has historically outperformed the market by around 120 basis points.

Overall, the S&P High Yield Dividend Aristocrats has demonstrated stable long-term dividend growth and consistent performance. With enhanced dividend yields and a defensive positioning during market downturns, the index has provided investors with a reliable source of income and potential for growth over the years.