Inflation Fighting With Dividend Growth ETFs

For example, the WisdomTree U.S. Dividend Growth Fund (NasdaqGM: DGRW) emphasizes sectors that have recently shown a penchant for raising dividends, such as technology and consumer discretionary. Those sectors, two of the largest contributors to S&P 500 dividend growth over the past several years, combine for over 38% of DGRW’s weight. DGRW’s weight of 20.4% to tech is large among dividend ETFs because the sector’s recent dividend growth has not yet resulted in long enough increase streaks to qualify it for a large footprint in some of the aforementioned ETFs.

The First Trust NASDAQ Rising Dividend Achievers ETF (NasdaqGM: RDVY), which debuted earlier this year, allocates almost 42% of its combined weight to tech and financial services names. Despite the recent rebound in bank dividends, one that is expected to be ongoing, the dividend cuts seen during the financial crisis resulted in reduced weights to financials for ETFs that focus on payout increase streaks. [ETFs for Rising Bank Dividends]

RDVY has an almost 46% combined weight to tech, industrial and discretionary names while DGRW’s exposure to those sectors is almost 55%, highlighting the utility of those funds as not only inflation-fighters, but durable options for rising rate environments as well. [Dividend ETFs for Rising Interest Rates]

WisdomTree U.S. Dividend Growth Fund Sector Weights