High-Dividend Stocks: Calling March 6, 2009
Published August 29, 2019
Head of Equity Strategy
It’s not often that you come across a chart that rivals levels last seen on the day the stock market bottomed out during the global financial crisis—ancient history now. March 6, 2009 witnessed the S&P 500 touch an intraday generational low of 666 (it is around 2,900 now).
That day also marked the beginning of the end for growth stocks for 49 months. From the stock market bottom to 4/18/2013, the WisdomTree U.S. High Dividend Index outperformed the S&P 500 Growth Index by 1,063 basis points (bps) annually. The fun for deep value mandates ended right then and there, followed by over six years of frustration to this day.
But as you can see, things are getting…interesting.
Figure 1: U.S. Growth Stocks Relative to High-Dividend Stocks
In the chart above, I marked the big turning points with orange arrows. Figures 2–4 show the returns between them.
Figure 2: Index Returns, 8/4/2006 (1st Orange Arrow) through 3/9/2009 (2nd Orange Arrow)
Figure 3: Index Returns, 3/9/2009 (2nd Orange Arrow) through 4/18/2013 (3rd Orange Arrow)
Figure 4: Index Returns, 4/18/2013 (3rd Orange Arrow) through Present (8/20/2019)
Because high-dividend companies comprise the value stocks of value stocks, notice that our Index did particularly poorly when value was “off?” Likewise, when value came snapping back in 2009, WisdomTree’s Index ripped higher, beating the S&P 500 by nearly double digits annually for years on end.
When deep value is on, deep value is on.
It has been forever since hunting for big dividends has paid off, so I can’t say if this is just the kind of extreme needed to cause a change in market leadership. But I will tell you this: Respect any chart that is near or touching March 6, 2009 levels.
Unless otherwise stated all data is from Bloomberg, as of 8/20/2019.
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About the contributor
Head of Equity Strategy
Jeff Weniger, CFA, has been with WisdomTree since 2017 and serves as the Head of Equities. He shapes the firm’s market outlook through a combination of macroeconomic and fundamental analysis. With more than two decades in investment strategy, Jeff is known for his work on market cycles and valuations. Before joining WisdomTree, Jeff was with BMO Private Bank and BMO Global Asset Management for 11 years. At BMO, he sat on the firm’s Asset Allocation Committee and co-managed ETF model portfolios across the U.S. and Canada. In 2013, at age 32, he became the youngest member of BMO’s Global Investment Forum. When he left BMO to come to WisdomTree, his final role was Director, Senior Strategist in the Office of the CIO in 2017.
Jeff is a frequent television guest on networks such as CNBC, Bloomberg, and Schwab, with regular print appearances in The Wall Street Journal, Barron’s and Reuters. He also appears weekly on the Behind the Markets podcast and is a regular on SiriusXM’s The Business Briefing. On X, Jeff has developed one of the larger followings in financial media. He earned a B.S. in Finance from the University of Florida and an MBA from the University of Notre Dame. He has held the CFA charter since 2006.