As bond yields turn, income-starved investors can take a look at relatively high-yield dividend stocks and related exchange traded funds.
According to Andrew Garthwaite, a global equity strategist at Credit Suisse Group AG, investors should focus on dividend stocks as an alternative to low-yield bonds, reports David Wilson for Bloomberg.
Looking at the Standard & Poor’s 500 Dividend Aristocrats Index, the so-called dividend aristocrats typically outperfomed the S&P 500 index since 1999 when the yield on 10-year Treasury notes dipped, or underperformed the S&P 500 when 10-year yields rose.
The SPDR S&P Dividend ETF (NYSEArca: SDY), which is benchmarked to the S&P High Yield Dividend Aristocrats Index, only dipped 0.04% year-to-date as 10-year Treasury yields fell from about 2.2% at the start of the year to 1.8%, whereas the SPDR S&P 500 ETF (NYSEArca: SPY) was down 0.34%. Over the past year, SDY rose 20.5% while SPY gained 19.9%.
The aristocrat dividend stock gauge tracks shares of companies that have increased dividends annually for at least 25 years. SDY has a 2.27% 12-month yield. [Quality Dividend ETFs with Consistent Yields]