Dividend investing is in vogue on rising Sino-U.S. trade tensions, slowing global economic growth and easing monetary policies. In keeping with the trend, ProShares launched two
dividend growth ETFs, namely, ProShares S&P Technology Dividend Aristocrats ETF (TDV) and ProShares Russell U.S. Dividend Growers (TMDV) on Nov 5 (read: Dividend Growth ETFs to Sail Through Trade Uncertainty). TDV and TMDV in a Nutshell
ProShares S&P Technology Dividend Aristocrats ETF seeks investment results, before fees and expenses, that track the performance of the S&P Technology Dividend Aristocrats Index. It is the only ETF that is focused on the S&P Technology Dividend Aristocrats which constitute of well-established, technology-related companies that have consistently raised their dividends for at least seven years. With a basket of 34 holdings, the fund charges 45 basis points. Moreover, it is heavily weighted on sectors like Data Processing & Outsourced Services, Semiconductors and Electronic Components with 20.8%, 20.4% and 11.4% weights, respectively.
ProShares Russell U.S. Dividend Growers seeks investment results, before fees and expenses, that track the performance of the Russell 3000 Dividend Elite Index. It is the only total market ETF focusing on the above-mentioned index which is a rare breed of U.S. companies that have raised their dividends for at least 35 consecutive years. With a basket of 68 holdings, the fund charges 35 basis points. Consumer Staples, Industrials and Financials make the top three sectors of the fund with 20.1%, 19.5% and 13.5% weights, respectively.
Why Dividend Growth ETFs?
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 brave the current market turmoil. Moreover, the current market conditions continue to look supportive for dividend growth funds. Going by the recent developments, chances of postponement of the Sino-US ‘phase 1’ deal signing to
December 2019 have increased. Moreover, there is uncertainty regarding the place of signing. It is believed that the two U.S. locations, Iowa and Alaska, have been ruled out and fresh locations in Asia and Europe have been being shortlisted for the high-level meeting. ETF Competition
TDV and TMDV will be competing with a wide range of dividend growth ETFs like the following:
Vanguard Dividend Appreciation ETF ( VIG Quick Quote VIG - Free Report)
This is the largest and the most popular ETF in the dividend space with AUM of $39.57 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 183 securities in the basket and charges 6 basis points (bps) in annual fees. VIG has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read:
Dividend Growth ETFs to Grab Amid Rising Geopolitical Risks). ProShares S&P 500 Aristocrats ETF ( NOBL Quick Quote NOBL - Free Report)
This product provides exposure to high-quality companies that have not just paid dividends but 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 57 securities in its basket. NOBL has amassed $5.99 billion in its asset base. It has an expense ratio of 0.35% and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read:
ETF Strategies to Follow as Volatility Seems Underpriced). iShares Core Dividend Growth ETF ( DGRO Quick Quote 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 478 stocks in its basket, the fund has AUM of $9.24 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2 (Buy) with a Medium risk outlook (read:
Dividend Growth ETFs for Long Term Investors). First Trust NASDAQ Rising Dividend Achievers ETF ( RDVY Quick Quote RDVY - Free Report)
This fund lends exposure to a diversified portfolio of 50 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 $937.3 million in its asset base. It has a Zacks ETF Rank of 2 with a Medium risk outlook (read:
A Spread of Top Dividend Growth ETFs for Your Portfolio). First Trust NASDAQ Technology Dividend Index Fund ( TDIV Quick Quote TDIV - Free Report)
Although, not exactly a growth dividend ETF, this fund offers exposure to 93 Technology and Telecommunications companies that pay a regular or common dividend. It has expense ratio of 0.50% and AUM of $1.06 billion. TDIV has a Medium risk outlook.
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