hi I'm Jimmy in this video we're looking at some recent stock market crashes to
see if a portfolio of dividend stocks is in fact better than investing in the
broader stock market hopefully we can use the details that we uncover in this
video to make better investment decisions and get us closer to achieving
our goal of financial independence okay so to represent our dividend portfolio
we're using the dividend aristocrats index now I'm sure that many of us know
that there is a dividend aristocrats ETF ticker symbol NOBL but that ETF didn't
start trading until 2013 but the index at the ETF follows well they've been
around since 1989 so I'm going to use that index to represent our dividend
portfolio then for the overall stock market I'm gonna use the S&P 500 ok now
I've seen a few comments on our invest now or wait for a stock market crash
series saying that it makes more sense to stay invested and try not to time the
market just stay invested all the time and broadly speaking I agree with this
concept but then in our best dividend stocks for passive income series well
I've been asked a few times if dividend stocks are really better investments and
if so why well it's that question that got me thinking that looking at some of
the past stock market crashes to see if dividend stocks really do better could
make sense and if they do perhaps this information can be used to ease some of
our investing fears of in theory buying right now and oh my god it happens to be
the top of the stock market what do we do then because at the end of the day we
are we have been in a really long bull run ok so let's jump in and see what we
found out this is the bursting of the technology bubble at the start of the
2000s after the crazy stock market run in the 1990s and during this time during
this time period here the S&P 500 was down about 47% and when we add the
dividend aristocrats index or we can see that they actually moved higher during
this very same time period the dividend aristocrats index moved higher by about
eight and a half percent now this actually makes a lot of sense if we
think about the tech bubble was mostly caused by the crazy overvalued new
technology stocks that were popping up to them
the dividend aristocrats index avoids generally those types of companies the
only of companies that have consistently raised their dividends for at least
twenty five consecutive years so by that rule alone you're going to
eliminate a lot of the new startup companies so this index isn't going to
have many of the high-flying companies that drove the stock market up so high
at the time plus may be dividend stocks simply perform better to dig a bit
further let's now jump over to the much wider spread Great Recession so this is
the S&P 500 at the top of the stock market all the way down to the bottom
during the Great Recession that fall share a total return loss of about 55
percent and when we add the dividend aristocrats index well there they showed
a total return loss of negative 47 percent so the dividends perform better
sure although they didn't perform much better at least not at least with the
tech bubble it was obvious who the winner was here yes they performed
better but not too much better now personally I believe that long-term
investing is the smartest way to do things so to that point I started asking
what if we held on to these stocks for a bit longer what if he held each of these
portfolios for let's say one more year so what we did is we bought at the very
top of the stock market we held it till the bottom and then one additional year
so in the year after the bottom of the stock market
well the dividend aristocrats index was up about 82 percent while the S&P 500
was up about 72 percent so once again it seemed that the dividend stocks
performed better so for this whole time period here well the dividend aristocrat
see index was down about 4% and the S&P 500 was down a bit less than 23% now
there are two quick points I want to bring out about the charts I'm using
first these are total return numbers so total return numbers assume we reinvest
all the dividends back into the original portfolio so that 3.8 percent number
well that assumes that we took all the dividends that we received from that
index and reinvested it in that in those companies the second is this scale of
these two charts obviously the orange dividend aristocrats line well that's on
the right axis but I just point out that the two scales are not
the same in fact they don't even start at the same point the purpose of putting
on the same chart wasn't to compare them necessarily to each other the only
purpose here was to save room for the video so we could have two charts on
there at the same time yes the time frames are exactly the same so at the
bottom down here yes that was in fact the bottom for both of them in fact I
think there are a week or two apart when they both hit their own respective
bottoms for the purpose of our analysis the important part is what is the total
returned numbers for each of the time periods
okay now let's jump to last year where the S&P 500 saw an almost 20 percent
pullback in just a few short months you may remember that this ended at the on
Christmas Eve of December of last year so when we add the dividend aristocrats
index to this well we can see that the pullback for them was only a bit more
than 15 percent so once again dividend stocks outperformed the broader stock
market but then I've ran the same question that we did with the Great
Recession what happened then so since that time Kurt this is what that chart
looks like so this chart runs from the September highs of last year up until
the day before I published this video the dividend aristocrats index was up
about 13 and a half percent during that time period while the sp500 was up
almost 11 percent so once again yes it appears that dividend stocks do perform
better than the stock market average when the stock market runs into trouble
so for anybody trying to build a portfolio hopefully this is good
information to have as we move forward as the bull run continues to march along
now just recently I did a video where I ran through all of the current stocks in
the dividend aristocrats ETF to see if there were some sectors and companies
that could that appeared to be undervalued at this point that could be
a good next video for you to watch if you're interested there's a link right
here and a link in the description below hopefully you can jump over to that
video and I want to thank you for sticking with me all the way to get into
the video I really do appreciate it thanks and I'll see in the next video