Over the long-term, high-quality dividend-paying stock exchange traded funds could produce outperforming results. The PowerShares High Yield Equity Dividend Achievers Portfolio (NYSEArca: PEY) is one ETF that can position investors for years of consistent, dependable dividends.
“PEY follows the Nasdaq U.S. Dividend Achievers Index, which selects companies based on a combination of dividend growth and yield. This ETF holds 50 companies with over 42% of the fund’s combined weight allocated to the utilities and energy sectors,” according to InvestorPlace.
Dividend growers provide an aspect of quality and growth since these firms have a long track record of raising dividends.
Related: Best of Both Worlds With This Dividend ETF
Stocks with steady dividend yields reassure investors of a company’s strong financial health. Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return. Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
“In looking at some of the ETF’s top holdings it’s no surprise to find big telecom names like Verizon (NYSE:VZ) and AT&T (NYSE:T), as well as tobacco plays like Altria Group (NYSE:MO) and smaller tobacco companies like Vector Group (NYSE:VGR). Sector-wise, utility stocks make up 20% of the overall ETF holdings, followed by financial services at 17%, and consumer-defensive stocks like Procter & Gamble (NYSE:PG), Kellogg (NYSE:K)and General Mills (NYSE:GIS), with that group making up 16% of the ETF’s overall holdings,” according to ETF Daily News.
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