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How do you use S&P 500 ranks in index performance to determine investment opportunities?

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Quick Answer

The Standard & Poor's quality rankings measure growth, earnings over time and dividend payment history of more than 3,000 U.S. companies as of July 2015. Based on detailed analyses of long-term performance information, the quality rankings are a useful tool for investors in search of high-performing companies, reports PR Newswire.

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Full Answer

With its earnings and dividend ranking system, or quality rankings, Standard & Poor's divides U.S. companies into categories based on growth and dividend performance over the previous 10 years. Companies in the A+ category show consistent growth and increases in dividend payments, reports Standard & Poor's, with investments in these companies beating the S&P 500 Index by over 150 basis points, or 1.5 percent.

In the bull markets of the 2000s, positive growth and dividend data were considered indicators of companies with sluggish performance. With the return in the 2010s of a bear market, the S&P quality rankings demonstrate that these factors reliably indicate opportunities for investors interested in stability and continued returns over time, according to PR Newswire.

Investors can access the S&P quality rankings through Standard & Poor's Stock Reports, a subscription service. The reports are available in print to customers of investment firms and online for a fee through investment websites such as StandardAndPoors or Morningstar.

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