Dear investor,
As you know, there are different types of investors. Some investors trade different stock sectors, others focus on rapid growth, and others on dividend stocks.
What you may not know is that these strategies also have a season! So there are times when one particular strategy or group of shares performs better than another.
And now is exactly such a time: the season of dividend stocks.
A comparison of the seasonality of dividend shares
One fund that represents dividend shares is the John Hancock Premium Dividend Fund (PDT). It has a history of over 30 years and currently has a payout ratio of around 7.5% This makes it suitable for our analysis.
For this analysis, we compare the seasonal performance of the PDT dividend fund with the SPDR S&P 500 ETF (SPY). Although this comparison is not and cannot be perfect, there is at least a basic comparability in terms of fund expenses and distributions (dividends are taken into account in both cases).
The seasonal chart below shows you the seasonal development of the PDT in blue. For comparison, you can see the seasonal performance of the SPDR S&P 500 ETF (SPY) in red.
PDT (blue), SPY (red), seasonal progression, determined over 25 years
Dividend stocks typically rise stronger in the summer. Source: Seasonax
As you can see, there are certainly differences in the seasonal pattern.
After a strong start to the year for dividend shares, there is a slump in March. From then on, dividend shares catch up, with the spread widening increasingly from the end of April.
Summer is the season for dividend shares!
Until the end of August, dividend stocks can gain more than the SPDR S&P 500 ETF (SPY), but then the latter catches up towards the end of the year.
So if you want to switch to a dividend strategy, now is the right time from a seasonal perspective!
Kind regards,
Dimitri Speck
Founder and Chief Analyst of Seasonax
PS: With Seasonax you can easily show the seasonality of other instruments in a chart. To do this, click on “More” at the top right of the chart and then enter the other instrument under “Compare Instrument”. The line with the comparison instrument will immediately appear in your seasonal chart.
