Dividend Aristocrats Value

A strategy for investors seeking income and growth from a portfolio of quality blue chip stocks. 

Strategy Description

This model uses the Dividend Aristocrat index as a base.  The index is comprised of 50 stocks from the S&P 500 that have at least 25 years of increasing dividends.

The goal of the Dividend Aristocrat Value stock model is to hold the 10 most undervalued stocks in the index.  The criteria for selection include having the highest dividend yield.  Then the model examines stocks that have large high yields when compared to their 5-year returns.  Then we add two complex ranking systems to determine the buy selections.

Although the goal of the model is to hold 10 stocks, the positions aren’t forced.  When fewer stocks meet the rules, the model will select less than 10 positions in which case the model will hold cash.   

The model is rebalanced weekly.



Sharpe Ratio – the average return earned in excess of the risk-free rate.  A higher Sharpe Ration is better

Risk-Free Rate – represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.

Sortino Ratio – another measure of risk that takes into account the downside deviation of the asset.  A higher Sortino Ratio is better.

What is Drawdown?

Drawdown is the measure from the highest high to the lowest low or peak to trough during a specific time period.  It is an important measurement of risk.  A larger drawdown requires a more significant increase in the security to recover.

Volatility measures the change in the price of an investment.  The higher the volatility, the higher the difference between the high and the low of an investment’s price.

The 12 Month Rolling ROR is the compound rate of return for the last 12 months.  The rate of return is the gain or loss on an investment over a specified time period, expressed as a percentage of the investment’s cost.

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