Dividend Growers: Yield Now—and for the Future
A Note about Risk: The value of investments in equity securities will fluctuate in response to general economic conditions and to changes in the prospects of particular companies and/or sectors in the economy. While growth stocks are subject to the daily ups and downs of the stock market, their long-term potential as well as their volatility can be substantial.
Small-cap and mid-cap company stocks tend to be more volatile and may be less liquid than large-cap company stocks. Small-cap companies also may have more limited product lines, markets, or financial resources and typically experience a higher risk of failure than large cap companies. Mid-cap companies typically experience a higher risk of failure than large cap companies.
Forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.
Dividends are not guaranteed and may be increased, decreased, or suspended altogether at the discretion of the issuing company.
Dividend policy: A stock is classified as a dividend payer if it paid a cash dividend any time during the previous 12 months, a dividend grower if it initiated or raised its cash dividend at any time during the previous 12 months, and non-dividend payer if it did not pay a cash dividend at any time during the previous 12 months.
Downside capture: The downside capture ratio measures a manager’s performance in down markets relative to a particular benchmark. A down market is one in which the market’s quarterly (or monthly) return is less than zero. For example, a ratio of 50% means that the portfolio’s value fell half as much as its benchmark index during down markets.
Quality stocks: Equities with a track record of earnings and dividend growth are often characterized as high-quality. For example, independent research firm Standard & Poor’s assigns quality rankings to stocks on their 10-year history of earnings and dividend growth.
The Russell 1000® Index measures the performance of the 1,000 largest companies in the Russell 3000 Index, which represents approximately 92% of the total market capitalization of the Russell 3000 Index.
The S&P 500® Index is widely regarded as the standard for measuring large cap U.S. stock market performance and includes a representative sample of leading companies in leading industries.
The S&P 900© 10-Year Dividend Growth Index is a subset of the S&P 900 Index. The index consists of large and mid-sized companies that have a 10-year history of dividend issuance and growth, and that meet certain other criteria. The Dividend Growth Index represents a considerably narrower investable universe than the S&P 900 Index because of these stringent criteria. The Dividend Growth Index is a custom index that was developed at the request of Lord Abbett. The Dividend Growth Index is the exclusive property of S&P Dow Jones Indices LLC. Under a contract with Lord Abbett, S&P Dow Jones administers, maintains, and calculates the Dividend Growth Index. S&P Dow Jones and its affiliates shall have no liability for any errors or omissions in calculating the Index.
Indexes are unmanaged, do not reflect deduction of fees and expenses and are not available for direct investment.
The opinions in the preceding commentary are as of the date of publication and subject to change based on subsequent developments and may not reflect the views of the firm as a whole. This material is not intended to be legal or tax advice and is not to be relied upon as a forecast, or research or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. Investors should not assume that investments in the securities and/or sectors described were or will be profitable. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy or completeness of the information. Investors should consult with a financial advisor prior to making an investment decision.