Dividend Aristocrats carry a reputation for rewarding patient investors with durable, well-run companies, but a rival ETF built around a completely different screen has produced a dramatically different result over five years and ten years alike.
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The ProShares S&P 500 Dividend Aristocrats ETF (CBOE:NOBL) is a common pick for investors who want durable, well-run companies and treat a long record of dividend increases as proof of that strength. The logic holds up, and NOBL has made money for its owners. Over the past five years, though, the ProShares fund returned 37.47%. The Fidelity Quality Factor ETF (NYSEARCA:FQAL) picks U.S. companies on quality characteristics instead, and it returned 70.6% over the same stretch.
That works out to a gap of 33.13 percentage points. A $100,000 position in NOBL grew to $137,470, and the same amount in the Fidelity fund grew to $170,600. The figures assume every distribution was reinvested, and the windows both start on October 28, 2021. If you use the Aristocrats screen as a stand-in for quality, a direct quality screen captured far more of the market’s gains over those five years.
Ten-Year Results Make the Case Stronger
The longer record points the same way. Over ten years, the Fidelity fund returned 291.27% while NOBL returned 177.87%, a gap of 113.4 percentage points. Both ten-year windows start on October 28, 2016.
In dollars, $100,000 in the quality fund grew to $391,270, compared with $277,870 in the Aristocrats fund. A lead that holds across both periods points to a durable pattern across start dates. For a long-term holder, the gap between those ending values matters more than any single quarter’s result.
Over the Past Year, the Aristocrats Fund Has Led
Recently, that pattern has reversed. Over the past year, NOBL returned 14.5% against 12.71% for the Fidelity fund, putting the Aristocrats fund ahead by 1.79 percentage points. In other words, anyone who bought the quality fund a year ago has trailed slightly.
Year to date, NOBL is up 13.25% versus 12.9%, a lead of 0.35 percentage points. The one-year and year-to-date margins are narrow.
The one-month margin is wider. NOBL gained 5.57% in the past month while the Fidelity fund gained 0.4%, a gap of 5.17 percentage points. Based on delayed quotes from early Wednesday afternoon, October 28, NOBL traded at $58.03 and the Fidelity fund at $84.53. The case for switching depends on the long-run record. The past 12 months do not support it.
Two Funds Built for Different Goals
The ProShares fund aims to track the S&P 500 Dividend Aristocrats Index, which follows S&P 500 companies that have raised their dividends every year for a long stretch, per its current summary prospectus. The record of dividend growth is the selection test.
The Fidelity Quality Factor ETF tracks the Fidelity U.S. Quality Factor Index, which follows U.S. companies with a stronger quality profile than the broader market. It is a quality-factor fund, and its index makes no attempt to select companies for a growing payout.
That difference matters most to income-focused holders. NOBL holders focused on dividend income or dividend growth will not get the same thing from the Fidelity fund. A switch changes what you own, along with how it has performed.
Making the Switch Without a Tax Surprise
In an IRA or 401(k), selling NOBL and buying the Fidelity fund has no immediate tax effect. In a taxable account, selling locks in any capital gain, and shares held longer than a year are generally taxed at long-term rates. Investors with large unrealized gains sometimes take a lower-cost approach by sending new contributions and reinvested distributions to the quality fund while leaving existing NOBL shares in place. Some investors instead move part of the position, such as the shares with the lowest gains, and keep the rest.
Which Investors Each Fund Fits Best
The Fidelity fund’s 33.13-point five-year lead and 113.4-point ten-year lead are central to evaluating a switch from NOBL, particularly inside a tax-advantaged account, for anyone using it as a stand-in for quality and long-term growth. For those who own NOBL specifically for a stream of rising dividends, the Aristocrats fund remains aligned with that goal, because the quality fund was never built for that job. For taxable investors sitting on big gains, sending new money to the quality fund carries a lower tax cost than selling.
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