ProShares Picks Dividend Aristocrats

11/27/2014 8:00 am EST

Focus: ETFs

Jimmy Mengel

Editor, Outsider Club

The S&P Dividend Aristocrat Index is comprised of 54 companies that have raised their dividends each and every year for 25 consecutive years, explains Jimmy Mengel, editor of Crow's Nest.

If you invested in that index over the past five years, you would have seen a whopping 122% return. If you invested in the aristocrats over the past ten years, you’d be sitting at an outrageous 183% return versus the 102% you would have gained from the standard S&P 500 (SPX).

If you’d like to get easy exposure to Dividend Aristocrats, consider the ProShares S&P 500 Aristocrats ETF (NOBL), which was launched last year.

For a one-stop shop for a basket of low-risk dividend stocks, this ETF is ideal. It includes only large-cap companies that have increased dividends every year for at least the last 25 consecutive years.

The sole purpose of this fund is to passively follow the S&P 500 Dividend Aristocrats Index. NOBL currently holds a total of 54 companies with an average index market cap of just over $60 billion. The average price-to-earnings ratio is 19 and the price-to-book ratio is 3.29.

The 30-day SEC yield comes to 1.9% with quarterly distributions. This is a relatively new standardized calculation created by the SEC to make comparing yields easier on the fly.

It is calculated by dividing the investment income earned by the fund (minus expenses) over the most recent 30-day period by the current maximum offering price. The point is to make the effect of fees a bit more transparent.

In regard to holdings, the largest position by percentage is 2.09%. The fund is pretty heavily weighted towards consumer goods, both cyclical and non-cyclical.

This can exceed the 30% weighted limit of the underlying index in the short-term, but it will be revised down at the end of the quarter.

After all, this is a passive fund with a low expense ratio of 0.35%. Thanks to the healthy size and volume traded for NOBL, the share price rarely deviates by more than a penny or two from the net asset value of holdings

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