Dividend Stocks and Market Trends
Value stocks, including dividend stocks, have underperformed compared to the S&P 500 since October 2022. As of the latest market outlook, valuations and payout ratios for dividend stocks are nearing generational lows, indicating a potential cyclical reversal. Morningstar analyst David Sekera highlights that value stocks are now undervalued relative to the market, a disparity echoed by JPMorgan Asset Management, which predicts a significant period of dividend growth, projecting an acceleration of global dividend per share growth from 5.6% to 7.6% annually.
The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) currently holds 337 stocks with an average trailing dividend yield of 1.7%. This ETF has seen its quarterly per-share payment grow to $0.87, nearly double from a decade ago, reflecting an annualized growth rate of over 7%. Analysts advise that while VIG may not suit all investors—particularly those seeking high immediate yields—long-term investors aiming for sustainable dividend growth might find it a worthwhile option as global dividend growth gains momentum.
