Dividend Investing Strategies

Research evidence excerpt

Dividend Investing Strategies

Macro Research

Portfolio Strategy

Accounting and Tax Policy

Special Situations

June 29, 2026

Dividend Themes for all Market Environments

Key Points

Dividend investing strategies’ performance has been mixed YTD with high dividend

growth/high free cash flow strategies outperforming other dividend themes, such as

dividend aristocrats and 2nd quintile dividend yield.

High Dividend Growth and High Free Cash Flow Yield. Over the cycle, we prefer

companies with the powerful combination of high dividend growth and high free cash flow

yield. This has been the best performing dividend theme that we track, with this group of

stocks +11% YTD in line with the S&P 500 equal weighted index. Historically, this cohort

of stocks has outperformed by 500+ bps annually. See Pages 6 and 7 for a current list.

Dividend Aristocrats. For defensive dividend strategies, our favorite is Dividend

Aristocrats (companies with a long track record of consistently increasing dividends). After

recent outperformance, Dividend Aristocrats’ relative PE vs. the S&P 500 is still at a

historically inexpensive ~.88x. We also highlight a list of companies as “Emerging”

Aristocrats - those increasing their dividend for at least 15 years.

Dividend Buy Idea Screen. This consists of 31 stocks that are either S&P 500 Dividend

Aristocrats or Emerging Aristocrats with at least two of the following 1) above market LTM

divi growth 2) in the 2nd quintile of dividend yield or 3) have recently launched or increased

a large buyback program. Stocks meeting these criteria and also not with low earnings

quality or high short interest include: CBOE, AMP, FAST, NOC, ITW, WM, RSG, CMI,

QCOM, TEL, STE, DGX, LIN, among others listed on Page 2.

Increasing Buyback Programs.