Skelly thinks sectors with relatively high cash positions, higher revenue-growth potential and modest payout ratios are likely to produce the highest rates of dividend growth.
Specifically, he points to master limited partnerships. ETFs tracking this asset class include JP Morgan Alerian MLP Index ETN (NYSEArca: AMJ), Credit Suisse Cushing 30 MLP Index ETN (NYSEArca: MLPN) and Alerian MLP ETF (NYSEArca: AMLP). [MLP ETFs: High Yield and Low Volatility]
“We also like the health care and technology sectors, along with select consumer discretionary companies with higher-than-average exposure to the emerging markets,” Skelly said in a note.
Among State Street’s lineup of sector ETFs, investors can start their research with Health Care Select Sector SPDR (NYSEArca: XLV), Technology Select Sector SPDR (NYSEArca: XLK) and Consumer Discretionary Select Sector SPDR (NYSEArca: XLY). [Baby Boomers, Economy Drive Top-Performing Sectors]