The FlexShares ETFs consider “profitability, cash flow generation and quality of management because bad management can undo a good company,” said Thomas.
QDF, QDEF and QDYN do not overtly eschew dividend increases, but the ETFs do offer ample exposure to recent sources of dividend growth. For example, QDF allocates more than 32% of its combined weight to financial services and technology names, the two leading sources of S&P 500 dividend growth over the past several years.
The FlexShares dividend ETF feature no “over concentration to certain sub-sectors” while offering “potentially better returns from sources of yield investors previously haven’t looked,” said Thomas.
The tactical approach works. QDEF and QDYN are up an average of 22.5% this year. QDEF has $39.2 million in assets under management while QDYN has $12.2 million.
ETF Trends editorial team contributed to this article.