As the new year begins, factors that are in favor of dividend-focused ETFs include ongoing market volatility, short-term interest rates that are hovering around zero and the constant threat of the Eurozone debt crisis that is nowhere near resolution. Investors may choose to invest in dividend funds to boost returns and acquire an income stream higher than 10-year Treasury yields.
“Another one of those [risk]themes that kind of falls into this: low volatility and income actually sit side-by-side, but income was one of the huge drivers in ETF new product launch success and general flows overall. Dividend-themed income funds, low volatility funds which kick off a nice income stream. Also, dividend-themed income funds that move beyond just U.S. large-cap dividends, but also international. Huge growth drivers in that area, lots of interest going on in 2011,” Scott Burns at Morningstar wrote in a recent article. “Investors–especially ETF investors–clearly are looking for income.”
SPDR S&P Dividend ETF
Tisha Guerrero contributed to this article.