Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
 
 


 

S&P Dividend Aristocrats Target 25 Portfolio, 3rd Quarter 2019 Series

The S&P Dividend Aristocrats Target 25 Portfolio is a unit investment trust which is based on the S&P 500 Dividend Aristocrats Index. The objective of the S&P Dividend Aristocrats Target 25 Portfolio is to identify companies with the potential to provide total return through a combination of dividend income and capital appreciation; however, there is no assurance the objective will be met.

Reasons To Consider Dividend-Paying Stocks

  • History shows that, over the long-term, dividends provide a key component of total return. As interest rates remain low, investors are turning their attention to dividend paying stocks.
  • Historically, dividends have made up a significant portion of stock market total return. According to Ibbotson Associates, dividends have provided approximately 42% of the 9.99% average annual total return on the S&P 500 Index from January 1926 through December 2018.
  • Due to the fact that corporations are not obligated to share their earnings with stockholders, dividends may be viewed as a sign of a company's profitability as well as management's assessment of the future, in our opinion.
  • We believe that companies that distribute dividends on a regular basis generally demonstrate financial strength and positive performance relative to their peers.

Why Invest In Companies With A History Of Growing Dividends?

Quality | Companies that have been able to consistently grow their dividend have a tendency to be high quality compared to those of the broader market in terms of earnings quality and leverage, in our opinion. A company's ability to reliably increase its dividend for years, or even decades, can be an indication of its financial strength or discipline.

Buffer Against Market Volatility | Dividend growth companies may be attractive to investors looking for disciplined companies that can endure difficult market and economic environments. These companies typically feature healthy balance sheets and consistent cash flows that provide plenty of capital to effectively operate their business and fund a growing dividend.

Address The Potential Risks Associated With Rising Rates | Unlike high dividend yield strategies which tend to be concentrated in companies from certain sectors that could come under pressure during periods of rising rates, dividend growth strategies tend to be more diversified and able to provide increased exposure to sectors that could become more desirable with improving economic activity and rising rates.

Chart

 


What Is The S&P 500 Dividend Aristocrats Index?

The S&P 500 Dividend Aristocrats Index is comprised of companies that have increased dividends every year for the last 25 consecutive years. The index captures companies with a history of providing sustainable dividend income and capital appreciation potential, both key factors in total return.

Portfolio Selection Process & Dividend Growth

The Strategy

The S&P Dividend Aristocrats Target 25 Portfolio invests in companies from the S&P 500 Dividend Aristocrats Index. The index consists of companies from the S&P 500 Index that have increased dividends every year for at least 25 consecutive years.

The strategy is based on these steps:

  • Begin with the stocks that comprise the S&P 500 Dividend Aristocrats Index. Regulated investment companies, limited partnerships and business development companies are not eligible for selection.
  • Rank each stock on three equally weighted factors:
    • Debt-to-equity. Compares a company's long-term debt to their stockholder's equity. Higher levels of this ratio are associated with higher risk, lower levels with lower risk.
    • Price-to-cash flow. Measures the cost of a company's stock for every dollar of cash flow generated. A lower, but positive, ratio indicates investors are paying less for the cash flow generated which can be a sign of value.
    • Return-on-assets. Compares a company's net income to its total assets. The ratio shows how efficiently a company generates net income from its assets.
  • Purchase an approximately equally weighted portfolio of the 25 stocks with the best overall ranking on the three factors with a maximum of seven stocks from any one of the major Global Industry Classification Standard (GICS) market sectors.

It is important to note that the past performance of the strategy is hypothetical and it is not indicative of the future performance of the S&P Dividend Aristocrats Target 25 Portfolio.

Chart

Chart

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

Mountain Chart

Standard Deviations* Average Annual Total Returns*
S&P 500
Index
Strategy S&P 500
Index
Strategy
Since 2000 14.53% 12.64% 4.86% 8.53%
15 years 13.46% 11.67% 7.76% 8.81%
10 years 13.59% 12.36% 13.10% 11.70%
5 years 10.94% 11.31% 8.48% 5.45%
3 years 10.95% 11.28% 9.24% 6.35%
*Through 12/31/18


Annual Total Returns
Year S&P 500
Index


Strategy

2000 -9.10% 6.88%
2001 -11.88% 16.08%
2002 -22.09% -10.18%
2003 28.65% 19.78%
2004 10.87% 17.21%
2005 4.90% 3.65%
2006 15.76% 18.03%
2007 5.56% 5.26%
2008 -36.99% -22.19%
2009 26.46% 21.76%
2010 15.08% 16.93%
2011 2.08% 8.46%
2012 15.98% 12.49%
2013 32.36% 33.47%
2014 13.66% 11.58%
2015 1.38% -2.85%
2016 11.93% 13.36%
2017 21.80% 16.67%
2018 -4.39% -9.04%
08/30/19 18.33% 14.80%

Past performance is no guarantee of future results and the actual current performance of the portfolio may be lower or higher than the hypothetical performance of the strategy. Hypothetical returns for the strategy in certain years were significantly higher than the returns of the S&P 500 Index. Hypothetical strategy returns were the result of certain market factors and events which may not be replicated in the future. You can obtain performance information which is current through the most recent month-end by calling First Trust Portfolios L.P. at 1-800-621-1675 option 2. Investment return and principal value of the portfolio will fluctuate causing units of the portfolio, when redeemed, to be worth more or less than their original cost.

Simulated strategy returns are hypothetical, meaning that they do not represent actual trading, and, thus, may not reflect material economic and market factors, such as liquidity constraints, that may have had an impact on actual decision making. The hypothetical performance is the retroactive application of the strategy designed with the full benefit of hindsight. Strategy returns reflect a sales charge of 1.85% and estimated annual operating expenses of 0.185%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Returns assume that dividends are reinvested monthly. Actual portfolio performance will vary from that of investing in the strategy stocks because it may not be invested equally in these stocks and may not be fully invested at all times. It is important to note that the strategy may underperform the S&P 500 Index in certain years and may produce negative results.

Standard Deviation is a measure of price variability (risk). A higher degree of variability indicates more volatility and therefore greater risk.

You should consider the portfolio's investment objective, risks, and charges and expenses carefully before investing. Contact your financial advisor or call First Trust Portfolios, L.P. at 1-800-621-1675 to request a prospectus, which contains this and other information about the portfolio. Read it carefully before you invest.

Risk Considerations

An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning common stocks, such as an economic recession and the possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.

You should be aware that the portfolio is concentrated in stocks in both the consumer products and industrials sectors which involves additional risks, including limited diversification. The companies engaged in the consumer products industry are subject to global competition, changing government regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets. The companies engaged in the industrials sector are subject to certain risks, including a deterioration in the general state of the economy, intense competition, domestic and international politics, excess capacity and changing spending trends.

An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and certain mid-cap companies are often more volatile than those of larger companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.

One of the common stocks held by the trust is issued by a foreign entity. An investment in a portfolio containing equity securities of foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers.

The value of the securities held by the trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers.

As the use of Internet technology has become more prevalent in the course of business, the trust has become more susceptible to potential operational risks through breaches in cyber security.

Although this unit investment trust terminates in approximately 15 months, the strategy is long-term. Investors should consider their ability to pursue investing in successive portfolios, if available. There may be tax consequences unless units are purchased in an IRA or other qualified plan.

The S&P 500 Dividend Aristocrats Index is a product of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and has been licensed for use by First Trust Portfolios L.P. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust Portfolios L.P. The S&P Dividend Aristocrats Target 25 Portfolio is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Dividend Aristocrats Index.

 
Fund Cusip Information
30309G182 (Cash)
30309G190 (Reinvest)
30309G208 (Cash-Fee)
30309G216 (Reinvest-Fee)
Printer Friendly Page Printer Friendly Page
 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
Home |  Important Legal Information |  Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2019 All rights reserved.