“You have to reach for yield, but some investors are taking it too far,” Jason Thomas, chief investment officer at Aspiriant, said in the article.
Instead, Aaron Gurwitz, chief investment officer of Barclays’s wealth and investment-management division, suggests to allocate a portion of an income portfolio to dividends. For instance, a risk-tolerant investor may take on 65% to 70% in dividend stocks, whereas the more conservative investors would keep equities positions below 20%.
Moreover, investors can also strengthen their dividend position through focusing on quality companies that have a history of boosting payments. For example, the SPDR S&P Dividend ETF (NYSArca: SDY) follows companies of the S&P 1500 that have increased dividends for the last 20 consecutive years. SDY has a yield of 3.2%.
For more information on dividend funds, visit our dividend ETFs category.
Max Chen contributed to this article.