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Large Cap Dividend Stocks - Attractive Long-Term Investment Opportunities


Large Cap Dividend Stocks - Attractive Long-Term Investment Opportunities

Updated July 31, 2023 ~ We believe that large capitalization dividend stocks are an attractive addition to most investors’ portfolios. The S&P 500 High Dividend Index has over 80 companies with an average market capitalization of $35.5 billion and an average dividend yield of approximately 5.11% (compared to the S&P 500 dividend yield of 2.49%). The index has excellent industry diversification, with sector allocations as follows:


Large Cap industry diversification with sector allocations

Large capitalization dividend stocks almost always have investment-grade credit ratings. The average credit rating of the S&P 500 High Dividend Index (Large Cap Index) is BBB+, which is dramatically higher than the average credit ratings of the S&P MidCap 400 Low Volatility High Dividend Index (Mid Cap Index) and the S&P Small Cap 600 Low Volatility High Dividend Index (Small Cap Index), with average credit ratings of BBB- and BB+, respectively. In addition, the Large Cap Index has a lower correlation to the market than the S&P 500, with a correlation of only 78%.

As indicated below. long term returns of the Large Cap Index have been attractive relative to both the S&P and Nasdaq, with lower volatility:


Large Cap Index Returns in Comparison to S&P 500, Dow Jones DJIA and Nasdaq

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Citation:

All data for this article, charts, and tables is taken from Bloomberg as of 6/30/2023.

P/E Ratio - Price to earnings ratio, or P/E, is a way to value a company by comparing the price of a stock to its earnings. The P/E equals the price of a share of stock, divided by the company's earnings-per-share.

Sharpe - The Sharpe ratio compares the return of an investment with its risk. It's a mathematical expression of the insight that excess returns over a period of time may signify more volatility and risk, rather than investing skill.

Credit Ratings – Ratings are based on Moody's, Standard & Poor's, and Fitch.

Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Opinions represented are subject to change and should not be considered investment advice. Large Cap Dividend stock information is shown for illustrative purposes only.


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