A Strong Dividend Environment Should Boost This ETF

In the third quarter, dividend increases for U.S. common shares totaled $11.9 billion, up from $8.8 billion a year earlier. Nearly 480 dividend hikes were registered last quarter compared with almost 440 in the year earlier period, according to S&P Dow Jones Indices. And with the good times expected to continue for dividends, dividend ETFs should benefit.

Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, said he expects a “busy” fourth quarter on the dividend increase front, which could support payout ETFs into year-end.

The SPDR S&P Dividend ETF (NYSEArca: SDY), one of the largest U.S. dividend ETFs with $12.3 billion in assets under management, could be awash in dividend increases over the next few months. SDY tracks the S&P High Yield Dividend Aristocrats Index, which requires 25 years of consecutive dividend increases for membership. [Some Dividend ETFs Beating The S&P 500]

Based on historical dividend increases and current-year payment trends, suggests 13S&P 500 Dividend Aristocrats have yet to increase their dividend in 2013 and may choose to do so before the end of the year, according to Silverblatt.

Past dividend increases are not guarantees of futures hikes, but SDY holding VF Corp. (NYSE: VFC) consistently raises its dividend in October while Aflac (NYSE: AFL) and Cintas (NasdaqGM: CTAS) have been October dividend raisers over the past several years, according to S&P Capital IQ. [Surveying The Dividend ETF Landscape]