October was a down month for the S&P 500 Index seeing the index decline 1.87%. During the month, the dividend payers finally did outperform the non payers, -2.3% versus -6.2%, respectively. This is the first time payers have outperformed the non payers this year. On a year to date and 12-month time frame, the non payers continue to maintain a significantly higher return than the dividend payers.
Howard Silverblatt, Senior Index Analyst for Standard & Poor's notes in the October Monthly Market Attributes Report:
- From March 9th, the 165 trading days produced a 53.16% gain for the S&P 500, which is the best gain since the 53.76% increase in October 1938.
- While the market remains 33.80% off its 2007 high, the gains have mostly stayed with little profit taking and few major selling days.
- Volatility picked up during October and continues to remain higher than historical values, although lower than the first half of 2009. Year-to-date, there have now been more days where the S&P 500 moved less than 1% than more than 1%. However, the swings have also been fewer and less drastic. The last 5% move was on March 23rd (+7.08%), with the last 3% move occurring on June 22nd (-3.06%).
If the easy money has been made with strong performance from the higher risk, lower quality stocks, the market may be entering a period where the higher quality dividend growers begin to outperform the non payers over an extended period of time.