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Pick These Dividend Aristocrats ETFs for Solid Returns in 2020
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Ally Invest’s Lindsey Bell favors dividend aristocrats and has said that “they were up 12% in the month of November. Not only do they outperform the S&P 500 on a long-term basis, but they do so in a less volatile manner. So, you’re building a nice diverse base by having some exposure,” per a CNBC article. She also believes that dividend aristocrats have the ability to perform well and see more profits with recovery in economic growth.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination for dividend investing has been rising owing to easing monetary policy on the global front and market uncertainty triggered by the pandemic and deceleration in global growth. The demand for these funds is mostly driven by their characteristic of being the major source of consistent income for investors when returns from the equity markets are uncertain.
Dividend aristocrats are the blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, the dividend aristocrat funds provide investors with dividend growth opportunities in comparison to the other products in the space but may not necessarily have the highest yields.
Going on, these products also result in a decently strong portfolio with a higher scope of capital appreciation as against the simple dividend paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital appreciation opportunity, and are mostly good for risk adverse long-term investors.
Notably, November had stood out as a favorable month for Wall Street. The month saw consistent releases of positive coronavirus vaccine news amid the worsening coronavirus outbreak. Moreover, election results that showed chances of a divided Congress eased worries regarding major policy changes in the near term and largely drove the relief rally in U.S. equities.
Moreover, two front-runners in the coronavirus vaccine race, Moderna (MRNA) and Pfizer (PFE)/BioNTech, have applied to the FDA for emergency use authorization for their coronavirus vaccine. Notably, the FDA is supposed to meet with its Vaccines and Related Biological Products Advisory Committee on Dec 10 to review Pfizer's application and on Dec 17 to evaluate Moderna's application, going by a CNN report.
It is important to note here that distribution of coronavirus vaccines could start within weeks, pending authorization from the FDA, per the US Health and Human Services Secretary Alex Azar (according to a CNN report). However, it shall be June 2021 by when all Americans (who want a vaccine) will get vaccinated, according to an official with the White House vaccine initiative, per the report mentioned above.
Adding to the optimism in the investing world, a group of bipartisan senators announced a $908-billion "framework" for coronavirus relief aid on Dec 1, per a CNBC article. The introduction of another round of fiscal stimulus is expected to provide great support to U.S. equities.
ETFs to Consider
Against this backdrop, let’s take a look at some ETFs that investors can consider:
This is the largest and the most popular ETF in the dividend space with AUM of $51.94 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, composed of high-quality stocks, with a record of raising dividends every year. It charges 6 basis points (bps) in annual fees (read: 5 Dividend ETFs to Ride Out Market Volatility).
This fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P High Yield Dividend Aristocrats Index. The index screens for companies that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield. The fund has AUM of $16.79 billion. It charges 35 bps in fees per year.
The fund provides exposure to broad-cap U.S. companies with a consistent history of dividends and tracks the Dow Jones U.S. Select Dividend Index. The fund has AUM of $14.30 billion. It charges 39 bps in fees per year (read: 5 ETFs to Grab for a Really Good Deal on Black Friday).
This fund seeks investment results, before fees and expenses, that track the performance of the S&P 500® Dividend Aristocrats Index. It is the only ETF focusing exclusively on the S&P 500 Dividend Aristocrats—high-quality companies that have not just paid dividends but grown them for at least 25 consecutive years, with most doing so for 40 years or more. NOBL amassed $6.87 billion in its asset base. It has an expense ratio of 0.35%.
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. The fund has AUM of $13.80 billion. It charges 8 bps in fees per year.
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Pick These Dividend Aristocrats ETFs for Solid Returns in 2020
Ally Invest’s Lindsey Bell favors dividend aristocrats and has said that “they were up 12% in the month of November. Not only do they outperform the S&P 500 on a long-term basis, but they do so in a less volatile manner. So, you’re building a nice diverse base by having some exposure,” per a CNBC article. She also believes that dividend aristocrats have the ability to perform well and see more profits with recovery in economic growth.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination for dividend investing has been rising owing to easing monetary policy on the global front and market uncertainty triggered by the pandemic and deceleration in global growth. The demand for these funds is mostly driven by their characteristic of being the major source of consistent income for investors when returns from the equity markets are uncertain.
Dividend aristocrats are the blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, the dividend aristocrat funds provide investors with dividend growth opportunities in comparison to the other products in the space but may not necessarily have the highest yields.
Going on, these products also result in a decently strong portfolio with a higher scope of capital appreciation as against the simple dividend paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital appreciation opportunity, and are mostly good for risk adverse long-term investors.
Notably, November had stood out as a favorable month for Wall Street. The month saw consistent releases of positive coronavirus vaccine news amid the worsening coronavirus outbreak. Moreover, election results that showed chances of a divided Congress eased worries regarding major policy changes in the near term and largely drove the relief rally in U.S. equities.
Moreover, two front-runners in the coronavirus vaccine race, Moderna (MRNA) and Pfizer (PFE)/BioNTech, have applied to the FDA for emergency use authorization for their coronavirus vaccine. Notably, the FDA is supposed to meet with its Vaccines and Related Biological Products Advisory Committee on Dec 10 to review Pfizer's application and on Dec 17 to evaluate Moderna's application, going by a CNN report.
It is important to note here that distribution of coronavirus vaccines could start within weeks, pending authorization from the FDA, per the US Health and Human Services Secretary Alex Azar (according to a CNN report). However, it shall be June 2021 by when all Americans (who want a vaccine) will get vaccinated, according to an official with the White House vaccine initiative, per the report mentioned above.
Adding to the optimism in the investing world, a group of bipartisan senators announced a $908-billion "framework" for coronavirus relief aid on Dec 1, per a CNBC article. The introduction of another round of fiscal stimulus is expected to provide great support to U.S. equities.
ETFs to Consider
Against this backdrop, let’s take a look at some ETFs that investors can consider:
Vanguard Dividend Appreciation ETF (VIG - Free Report)
This is the largest and the most popular ETF in the dividend space with AUM of $51.94 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, composed of high-quality stocks, with a record of raising dividends every year. It charges 6 basis points (bps) in annual fees (read: 5 Dividend ETFs to Ride Out Market Volatility).
SPDR S&P Dividend ETF (SDY - Free Report)
This fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P High Yield Dividend Aristocrats Index. The index screens for companies that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield. The fund has AUM of $16.79 billion. It charges 35 bps in fees per year.
iShares Select Dividend ETF (DVY - Free Report)
The fund provides exposure to broad-cap U.S. companies with a consistent history of dividends and tracks the Dow Jones U.S. Select Dividend Index. The fund has AUM of $14.30 billion. It charges 39 bps in fees per year (read: 5 ETFs to Grab for a Really Good Deal on Black Friday).
ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report)
This fund seeks investment results, before fees and expenses, that track the performance of the S&P 500® Dividend Aristocrats Index. It is the only ETF focusing exclusively on the S&P 500 Dividend Aristocrats—high-quality companies that have not just paid dividends but grown them for at least 25 consecutive years, with most doing so for 40 years or more. NOBL amassed $6.87 billion in its asset base. It has an expense ratio of 0.35%.
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. The fund has AUM of $13.80 billion. It charges 8 bps in fees per year.
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 >>