The Shiller CAPE ratio has reached 41.3, its highest since the dot-com era. The article cites Dividend Aristocrats’ historical resilience and the NOBL ETF’s 2% yield as portfolio ballast, but says the ETF is not guaranteed to fall less in a future correction.
The cyclically adjusted price-to-earnings ratio compares stock prices with a decade of inflation-adjusted earnings. It reached 44.19 in late 1999; the S&P 500 peaked at 1,527.5 in March 2000, then fell 49% to 776.8 by October 2002 and took nearly five years to regain its peak.
S&P Dow Jones Indices data cited in the article show Dividend Aristocrats—S&P 500 members with at least 25 years of annual dividend increases—returned 10.2% and 10.8% in 2000 and 2001, while the S&P 500 lost 9.1% and 11.9%. In 2008–09, the group declined 21.9%, versus 37% for the index. NOBL tracks 69 such companies; its 10 largest holdings make up 17% of the fund, compared with nearly 40% of the S&P 500, and technology accounts for less than 3% of NOBL’s portfolio.
