Key Takeaways
- Broader U.S. equity market leadership has supported equal-weight and dividend growth strategies in 2026.
- The S&P 500 Dividend Aristocrats Index combines equal weighting with a 25-year record of annual dividend increases.
- Recent earnings growth, higher return on assets, and lower valuations may strengthen the fundamental case for the Dividend Aristocrats.
Dividend growth is back, and it’s fair to say that outperformance among dividend growth stocks may simply be overdue amid a shift in U.S. equity market leadership beyond a small group of mega-cap technology companies.
A years-long tech stock rally has left the S&P 500 Dividend Aristocrats Index trading at just two-thirds of the price-to-book of the overall S&P 500.[1] Now, with the performance of some of the large technology names cooling, the rest of the market may be catching up.
See more: How & Why Dividend Growth Stocks Beat Bonds: Model Portfolio Update
Market breadth has shifted beyond mega-cap technology
Dividend stocks are one area where the broadening of market performance seems to have brought investors back. The equal-weighted S&P 500 has outperformed the capitalization-weighted index this year, thanks to underperformance from some of the S&P 500’s largest names by market cap.
Fundamentals, not just weighting, strengthen the case
Weighting is only part of the story. By some measures, the equal-weighted S&P 500 may have weaker fundamentals than the capitalization-weighted index. The S&P 500 Dividend Aristocrats Index, however, is both equally weighted and only includes companies that have grown their dividends for 25 consecutive years. Their fundamentals tend to be stronger compared to the S&P 500.
Dividend Aristocrats Combine Higher Profitability With Lower Valuations
Earnings growth provides another measure of that strength. In the second quarter, the S&P 500 Dividend Aristocrats constituents grew their earnings by 34.6% year-over-year, a dramatic increase over a roughly 1.9% increase in the first quarter.[1] This earnings acceleration may indicate that recent strength has more fundamental support than a short-term rotation alone.
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1. Source: Bloomberg, data as of 9/11/26.
Important Information
This is not intended to be investment advice. There is no guarantee dividends will be paid. Companies may reduce or eliminate dividends at any time, and those that do will be dropped from the index at reconstitution.
Any forward-looking statements herein are based on expectations of ProShare Advisors LLC at this time. ProShare Advisors LLC undertakes no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise; actual results may vary materially.
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