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Tap on Dividend Aristocrats ETFs for Impressive Returns in 2021
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The Wall Street rally has been showing some signs of cooling down lately. Some major analysts are expecting a market correction. In this regard, Jared Woodard, investment & ETF strategist at Bank of America, has said that “we expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions,” per a CNBC article.
Notably, 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.
‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward 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.
Going on, these products also result in a 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.
Studying the recent market optimism, it seems like positive developments with regard to additional stimulus talks have supported the market rally. President Joe Biden held a meeting with Treasury Secretary Janet Yellen and the chief executives of some of the country’s major businesses in the Oval Office to talk about his $1.9-trillion coronavirus relief bill and the outlook for the U.S. economy, per a CNBC article. In order to support the United States’ return to full-employment by 2022, Yellen recently requested Congress to pass Biden’s stimulus plan, per a CNBC article.
It is also being believed that wider coronavirus vaccine rollouts are making a strong case in favor of faster U.S. economic recovery in 2021. In fact, according to the top U.S. infectious diseases expert, majority of Americans may be vaccinated by the middle or end of summer this year, per a CNN report.
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 $52.84 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: Defensive ETF Strategies for Those Fearing a Market Meltdown).
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 $17.05 billion. It charges 35 bps in fees per year (read: A Sneak Peek Into Popular ETF Investing Areas for Q1).
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 $15.07 billion. It charges 39 bps in fees per year.
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 has amassed $7.03 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 $15.44 billion. It charges 8 bps in fees per year (read: 5 Best ETF Investing Ideas for 2021).
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Tap on Dividend Aristocrats ETFs for Impressive Returns in 2021
The Wall Street rally has been showing some signs of cooling down lately. Some major analysts are expecting a market correction. In this regard, Jared Woodard, investment & ETF strategist at Bank of America, has said that “we expect a buyable 5-10% Q1 correction as the big ‘unknowns’ coincide with exuberant positioning, record equity supply, and ‘as good as it gets’ earnings revisions,” per a CNBC article.
Notably, 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.
‘Dividend aristocrats’ or ‘dividend growers’ are mostly deemed to be the smartest way to deal with market turmoil. Notably, the inclination toward 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.
Going on, these products also result in a 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.
Studying the recent market optimism, it seems like positive developments with regard to additional stimulus talks have supported the market rally. President Joe Biden held a meeting with Treasury Secretary Janet Yellen and the chief executives of some of the country’s major businesses in the Oval Office to talk about his $1.9-trillion coronavirus relief bill and the outlook for the U.S. economy, per a CNBC article. In order to support the United States’ return to full-employment by 2022, Yellen recently requested Congress to pass Biden’s stimulus plan, per a CNBC article.
It is also being believed that wider coronavirus vaccine rollouts are making a strong case in favor of faster U.S. economic recovery in 2021. In fact, according to the top U.S. infectious diseases expert, majority of Americans may be vaccinated by the middle or end of summer this year, per a CNN report.
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 $52.84 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: Defensive ETF Strategies for Those Fearing a Market Meltdown).
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 $17.05 billion. It charges 35 bps in fees per year (read: A Sneak Peek Into Popular ETF Investing Areas for Q1).
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 $15.07 billion. It charges 39 bps in fees per year.
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 has amassed $7.03 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 $15.44 billion. It charges 8 bps in fees per year (read: 5 Best ETF Investing Ideas for 2021).
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 >>