The first crop of baby boomers are reaching the age of retirement and will most likely shift their investment focus to fixed-income products, including bond exchange traded funds (ETFs).
While fixed-income products provide dependable income, there’s a
drawback: they don’t account for the eroding value of inflation.
According to the U.S. Census Bureau, the baby boom segment of the population will rise over the next 20 years, accounting for 42% of the population. This will drive a major demand shift to dividend-paying vehicles, along with price appreciation as a result, reports Dobromir Stoyanov for Seeking Alpha.
Historically, dividends have accounted for 40% of the total stock returns over the past 80 years. Stoyanov says that if retirees hold funds that have the ability to grow their dividend payments over time, they could be set for retirement.
Dividend-paying ETFs and their yields:
- PowerShares High Yield Dividend Achievers (PEY), 5.4%
- PowerShares High Growth Rate Dividend Achievers (PHJ), 2.9%
- PowerShares Dividend Acheivers (PFM), 2.1%
- SPDR Dividend ETF (SDY), 3.8%
- Utilities Select Sector SPDR (XLU), 2.9%
- iShares Dow Jones US Real Estate (IYR), 4.6%
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.