By Ian Salisbury

Looking for a place to ride out the recent stock selloff? Companies with decadeslong records of weathering the market's ups and downs may be the answer.

So-called " dividend aristocrats" -- companies that have made and raised their payouts for 25 straight years -- have outperformed growth stocks so far this year, Wolfe Research analyst Chris Senyek noted Tuesday.

If markets remain rocky, either because of the Trump administration's trade war or soft economic data, the aristocrats could continue to outperform. Even after 2025's gains, they remain undervalued, trading at lower price-to-earnings ratios than the broad market, Senyek wrote in a note.

"Our favorite defensive dividend strategy, dividend aristocrats, is a good place for investors to 'hide' in the event of an economic slowdown or recessionary environment," he wrote.

The easiest way for investors to bet on long-time dividend payers is through an exchange-traded fund like the ProShares S&P 500 Dividend Aristocrats ETF, often known by its stock ticker, NOBL. The fund has returned 2.1% so far this year, compared with the negative 1.6% return for the S&P 500. Growth stocks have fared even worse, declining 4.1%.

NOBL's strong results are thanks to investments in stocks like AbbVie, the fund's largest holding. The pharmaceutical company's shares have gained 14% in 2025, after AbbVie reported strong sales of some of its newer immunology drugs.

Consumer staples stocks -- which make up about 23% of the fund's portfolio, compared to just 8% of the S&P 500 -- have also played big roles. Coca-Cola, up 11% in 2025, and Kimberly-Clark, up 5%, are also top holdings.

Despite the gains, dividend aristocrats are still trading at a discount to the S&P 500, says Senyek. His research pegs these stocks' price-to-earnings ratio at just 0.92 times the broader market's valuation, a level he calls "historically impressive."

Indeed, while dividend aristocrats have mostly traded at a discount to the broad market since 2019, the shares changed hands a premium between 2013 and 2019, Senyek's data show.

Investors looking at dividend aristocrats should be aware of at least one drawback. While these blue chips can perform well when riskier stocks falter, in the long run, taking on less risk tends to mean lower returns.

Over the past decade, ProShares S&P 500 Dividend Aristocrats has returned 9.5% -- a solid result, but significantly below the S&P 500's 12.6% return.

Write to Ian Salisbury at ian.salisbury@barrons.com

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March 25, 2025 13:13 ET (17:13 GMT)

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