Heightened volatility in the commodity markets and weakening global fundamentals has shocked investors from across the globe over the past several weeks. Investors are now scrambling to find stability and many are trying to preserve their capital by investing companies that provide income via dividend payments. One group of companies that ought to be of specific interest to these investors is known as the dividend aristocrats, which represent a basket of companies that have increased their dividend payouts for consecutive 25 years. Given their incredible track record, the dividend aristocrats represent some of the most stable companies in the world and are a favorite of investors looking to withstand volatility. For more, see: The Power of Dividend Growth.

ProShares S&P 500 Dividend Aristocrats ETF

One of the most popular products that is used by investors for gaining exposure to the dividend aristocrats is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).  Taking a look at the chart below, you can see that see that the price of the fund has managed to avoid falling into a significant downtrend such as those commonly found in the commodities markets and other segments of the public markets. Notice how a short-term ascending triangle pattern has formed on the charts and how the 50-day moving average is a meager ten cents from crossing above the 200-day moving average, which is a popular long-term buy signal. Based on the pattern, bullish traders will likely be keeping a close eye on this ETF for the remainder of 2015 because a close above the top of the triangle pattern would signal a move higher. For more, see: 10 Dividend Aristocrats

NOBL Fund Fundamentals

Checking out the holdings of the NOBL could possibly be one of the best ways for investors to find ideas for what companies to buy when creating a portfolio of high-quality dividend paying stocks. The fund currently consists of 52 holdings, each with an average market cap of $58 billion, and has provided investors with a 12-month yield of nearly 2%. Given the reasonable expense ratio of 0.35% it is logical that many investors would just look to own the ETF. However, other investors may want to pick-and-choose their investments so these individuals may want to investigate one of the top five holdings, which are shown in the table below:

Company

Weighting (%)

Hormel Foods Corp. (HRL)

2.25

Consolidated Edison (ED)

2.25

Sysco Corp. (SYY)

2.22

The Clorox Co. (CLX)

2.14

McCormick & Co. (MKC)

2.11

Source: proshares.com

 

Hormel Foods Corp.

Hormel Foods Corp. is one of the strongest performing stocks in the market and the meat and food producer is well positioned heading into 2016. Currently, the company offers investors a yield of 1.50% and it recently announced record performance of the fiscal year of 2015. Strong profit margins, a consistent dividend and a leading business in the food industry create a lucrative choice for fundamental investors, but the chart is also just as impressive. As you can see below, the stock is an accelerating uptrend and the momentum from the recent earnings release doesn’t seem like it will end any time soon. The break above the nearby trendline offered active traders an ideal entry point and many will likely look to add to their positions on any form of pullback toward the trendline or the 50-day moving average (blue line). For more, see: Hormel Packages Food Profits.

 

The Bottom Line

Volatility and market declines are nearly impossible to avoid, but strategic investors are turning to high-quality dividend paying stocks known as the dividend aristocrats to preserve their capital and provide for potential upside. The strong chart of the ProShares S&P 500 Dividend Aristocrats ETF and its top holding Hormel Foods suggest that opportunities are available and that 2016 could be a good year for those willing to be selective and take risk. For more, see: Dividend Yield For The Downturn.

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