Last year was excellent for large, growth-oriented stocks and those who invested in them.
Apart from that, results were mixed. Most parts of the market couldn’t keep pace with the S&P 500, which is disproportionately swayed by mega-cap growth companies. In fact, the so-called Magnificent Seven stocks make up more than a third of the index, according to Goldman Sachs.
Dividend stocks were among the investments that fared admirably but underperformed in 2024. Morningstar’s US High Dividend Yield Index composed of companies with above-average yields rose by a respectable 16.9% last year, though US stocks broadly climbed about 24%.
The high-dividend index’s value tilt dragged it down relative to mega-cap growth, Alex Bryan, Morningstar’s director of product management for equity indexes, said in a recent interview.
“As it’s been pretty well documented, pretty much anything that’s been underweight tech and underweight growth more broadly has had a hard time keeping up,” Bryan told Business Insider. “And that’s certainly the case when it …