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Here's Why Dividend Growth ETFs Look Appealing Now
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Coronavirus continues to spread globally as the total number of cases has crossed 25 million, according to Johns Hopkins University. Meanwhile, more than 5.9 million coronavirus cases have been registered in the United States, with a death toll of at least 183,000. Per a CNN report, an ensemble forecast published by the United States Centers for Disease Control and Prevention now projects more than 200,000 coronavirus deaths, with an estimated 195,824 to 207,269 in the United States by Sep 19.
Notably, the outbreak has caused an unprecedented collapse of economic activities as governments had to shut down commerce and implement social-distancing measures in an effort to contain the spread of the virus. The job market has also been disrupted as Americans are consistently filing claims for unemployment benefits.
Moreover, with elections approaching, investors need to prepare for heightened volatility in the broader equities space. Also, it is being believed that the earnings results in the third and fourth quarter of the ongoing year might not be as well as the second quarter as most analysts are done with adjusting estimates.
The appeal of dividend ETFs has been rising in the face of easing monetary policy on the global front and market uncertainty triggered by the pandemic and deceleration in global growth. This is because dividend-paying securities are major sources of consistent income for investors when returns from equity markets are uncertain.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ could be the smartest way to deal with the current market turmoil. Investors mostly face difficulty in choosing between high-dividend paying ETFs and divided growth ETFs.
Research has shown that in the shorter run, during turbulent market times, the sustainability of dividends becomes a major criterion as a lot of companies are observed to be cutting or suspending their dividend payouts.
This is the largest and most popular ETF in the dividend space, with AUM of $47.92 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks with a record of raising dividends every year. It holds 212 securities in the basket and charges 6 basis points (bps) in annual fees. VIG carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: ETFs to Tap Warren Buffetts Investing Ideas as He Turns 90).
This product provides exposure to high-quality companies that have not just paid dividends but have hiked the same for at least 25 consecutive years, with most doing so for 40 years or more. It follows the S&P 500 Dividend Aristocrats Index, holding 65 securities in its basket. NOBL has amassed $6.30 billion in its asset base. It has an expense ratio of 0.35% and a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: A Quick Guide To Dividend Aristocrat ETFs).
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. Holding 419 stocks in its basket, the fund has AUM of $12.02 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2, with a Medium-risk outlook.
First Trust Rising Dividend Achievers ETF (RDVY - Free Report)
This fund lends exposure to a diversified portfolio of 51 companies with a stellar dividend payout history. It tracks the NASDAQ US Rising Dividend Achievers Index, charging investors 50 bps in annual fees. The ETF has accumulated $1.33 billion in its asset base. It carries a Zacks ETF Rank of 3, with a Medium-risk outlook.
With $408 million, this fund offers exposure to 285 companies that have raised dividends for 10 or more straight fiscal years. It has an expense ratio of 0.54%. PFM is a Zacks #3 Ranked ETF, with a Medium-risk outlook.
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Here's Why Dividend Growth ETFs Look Appealing Now
Coronavirus continues to spread globally as the total number of cases has crossed 25 million, according to Johns Hopkins University. Meanwhile, more than 5.9 million coronavirus cases have been registered in the United States, with a death toll of at least 183,000. Per a CNN report, an ensemble forecast published by the United States Centers for Disease Control and Prevention now projects more than 200,000 coronavirus deaths, with an estimated 195,824 to 207,269 in the United States by Sep 19.
Notably, the outbreak has caused an unprecedented collapse of economic activities as governments had to shut down commerce and implement social-distancing measures in an effort to contain the spread of the virus. The job market has also been disrupted as Americans are consistently filing claims for unemployment benefits.
Moreover, with elections approaching, investors need to prepare for heightened volatility in the broader equities space. Also, it is being believed that the earnings results in the third and fourth quarter of the ongoing year might not be as well as the second quarter as most analysts are done with adjusting estimates.
The appeal of dividend ETFs has been rising in the face of easing monetary policy on the global front and market uncertainty triggered by the pandemic and deceleration in global growth. This is because dividend-paying securities are major sources of consistent income for investors when returns from equity markets are uncertain.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ could be the smartest way to deal with the current market turmoil. Investors mostly face difficulty in choosing between high-dividend paying ETFs and divided growth ETFs.
Research has shown that in the shorter run, during turbulent market times, the sustainability of dividends becomes a major criterion as a lot of companies are observed to be cutting or suspending their dividend payouts.
Here are a few ETFs to consider:
Vanguard Dividend Appreciation ETF (VIG - Free Report)
This is the largest and most popular ETF in the dividend space, with AUM of $47.92 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks with a record of raising dividends every year. It holds 212 securities in the basket and charges 6 basis points (bps) in annual fees. VIG carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: ETFs to Tap Warren Buffetts Investing Ideas as He Turns 90).
ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report)
This product provides exposure to high-quality companies that have not just paid dividends but have hiked the same for at least 25 consecutive years, with most doing so for 40 years or more. It follows the S&P 500 Dividend Aristocrats Index, holding 65 securities in its basket. NOBL has amassed $6.30 billion in its asset base. It has an expense ratio of 0.35% and a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: A Quick Guide To Dividend Aristocrat ETFs).
iShares Core Dividend Growth ETF (DGRO - Free Report)
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. Holding 419 stocks in its basket, the fund has AUM of $12.02 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2, with a Medium-risk outlook.
First Trust Rising Dividend Achievers ETF (RDVY - Free Report)
This fund lends exposure to a diversified portfolio of 51 companies with a stellar dividend payout history. It tracks the NASDAQ US Rising Dividend Achievers Index, charging investors 50 bps in annual fees. The ETF has accumulated $1.33 billion in its asset base. It carries a Zacks ETF Rank of 3, with a Medium-risk outlook.
Invesco Dividend Achievers ETF (PFM - Free Report)
With $408 million, this fund offers exposure to 285 companies that have raised dividends for 10 or more straight fiscal years. It has an expense ratio of 0.54%. PFM is a Zacks #3 Ranked ETF, with a Medium-risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>