We recently compiled a list of the 10 dividend knights who outperformed the market in the last 3 years. In this article, we’re going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against other dividend stocks that have outperformed the market over the past 3 years.
The broader market has been a strong performer this year, rising nearly 30% since the beginning of 2024. According to Morningstar Direct, the S&P 500’s performance has surpassed this level in only 17 of the last 74 years. For example, in 1954, the index saw an increase of more than 52% and in 1989 it increased by about 31%. However, analysts warn investors to manage their expectations, as years of such exceptional returns are rare. Cathy Curtis, certified financial planner and founder and CEO of Curtis Financial Planning, made the following comment about the market’s performance this year in one of her recent interviews with CNBC:
“Investors should know that the stock market has an average annualized return of more than 10% for decades. Last year there was growth well in excess of this amount and it would be very unusual for that to continue over a period of several years.”
Regardless of where the market ends up, dividend stocks have great potential, as has been proven over the years. During previous periods of inflation, dividend stocks outperformed compared to other asset classes. Since the 1940s, dividends have accounted for 40% of the market, and this share increases during times of higher inflation, according to Hartford Funds. The report also highlighted the performance of dividend stocks in the 1970s, when they accounted for 73% of market returns. Additional studies, including one from Fidelity International, showed that dividends typically grow faster than inflation. Fidelity research indicated that since 1900, the 10-year average annual growth of dividends in the market has exceeded CPI growth almost 73% of the time.
In addition to their considerable impact on overall market returns, dividend stocks provide investors with a way to mitigate risks linked to market volatility. According to DWS Group, over the past 20 years, the monthly volatility of dividend yields was just 0.10%, compared to 3.75% for price returns. The report also notes that despite market fluctuations, investors have seen positive overall returns during this period. While higher risk factors played a major role in these returns, it was the dividend stream that proved to be a more stable and secure option amid stock market uncertainties.
Also read:
The 10 Best Steady Dividend Stocks to Invest in Right Now