Commentary

Still Stuck in the Value Trap?

by Michael Valentinas on June 29, 2026

An update to: 'Is Your Dividend Manager a Value Trap?'

When we published Is Your Dividend Manager a Value Trap? in late 2023, the S&P 500 closed the year up 26.3% while the average dividend strategy returned less than half (11.5%, net). With each new wave of growth-aligned themes (e.g., FANG, FAAMG, Mag7, currently AI), we question whether traditional criteria, such as counting consecutive years of dividend increases, have left many dividend managers structurally trapped in value.chart 1 - hists - 2
 
We analyzed the style spectrum by segmenting Russell 1000 companies into Growth and Value tiers. As shown in Chart 1, Growth companies are heavily concentrated in low-dividend yields. In fact, the median yield for Value (2.7%) ranks in the 93rd percentile of the Growth segment. Consequently, when markets favor growth, dividend-focused and traditional strategies structurally lack the mechanism to participate.
 
Chart 2 compares the broad U.S. large-cap market (Russell 1000) with the S&P Dividend ETF (SDY) and our U.S. Select Dividend (USSD) strategy. Driven by AI stocks, the Russell 1000 is heavily skewed toward Growth (60%) over Value (11%). In contrast, dividend strategies lean away from this concentration: SDY favors Value (38%) over Growth (23%), while USSD offers a more balanced mix, allocating 36% to Growth and 22% to Value.
 
Our U.S. Select Dividend and Global Select Dividend strategies are designed to maintain balance across equity styles, holding both traditional income-producers and growth-oriented stocks with the capacity to expand their dividends. That structural balance has been a meaningful contributor to how both strategies have navigated the market environment since our last update on this topic. If your dividend manager has underperformed through consecutive growth-driven cycles, the issue may be structural.
 
chart 2 - sankey - combo - 4
 
 
Please see Advisory Research’s Form ADV Part 2A, which is available upon request, for more information.
Advisory Research is providing this material for informational purposes only. The information provided is not intended to recommend any company or investment described herein, and is not an offer or sale of any security or investment product or investment advice. Before making any investment decision, you should seek expert, professional advice and obtain information regarding the legal, fiscal, regulatory and foreign currency requirements for any investment according to the laws of your home country or place of residence.
 
Certain information contained herein constitutes forward looking statements, projections and statements of opinion (including statements of financial market trends). Such information can typically be identified by the use of terminology such as “may”, “will”, “should”, “expect”, “anticipate”, “project”, “estimate”, “intend”, “continue” or “believe” or comparable terminology. All projections, opinions and forward looking statements are based on information available to Advisory Research as of the date of this presentation, and Advisory Research’s current views and opinions, all of which are subject to change without notice. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in forward looking statements. Additionally, information and views presented herein may be drawn from third-party or public sources which are believed, but not guaranteed, to be reliable and which have not been verified for accuracy or completeness.
 
Advisory Research’s strategies are actively managed and not intended to replicate the performance of any cited index: the performance and volatility of Advisory Research’s investment strategies may differ materially from the performance and volatility of a cited index, and their holdings will differ significantly from the securities that comprise the index. You cannot invest directly in an index, which does not take into account trading commissions and costs.
 
Benchmark comparison is presented using the iShares Russell 1000 ETF and the iShares MSCI ACWI ETF as Advisory Research considers these ETFs to parallel both associated risk and the investment style presented by the strategy. The iShares Russell 1000 ETF seeks to track the investment results of an index comprised of large- and mid-capitalization U.S. equities. The iShares MSCI ACWI ETF is an exchange-traded fund incorporated in the USA. The ETF tracks the performance of the MSCI All Country World Index and holds over 1200 equities in developed and emerging markets. The SPDR S&P Dividend ETF replicates the performance of the S&P High Yield Dividend Aristocrats Index which measures the performance of high dividend yielding companies that have followed a managed-dividends policy consistently in increasing dividends every year for a least 20 consecutive years.
 
Advisory Research is an investment adviser in Chicago, IL. Advisory Research is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Advisory Research only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Advisory Research’s current written disclosure brochure filed with the SEC which discusses among other things, Advisory Research’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov
 
Strategies: Select Dividend

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