SDY, which yields 2.28%, skirts the issues with financial services dividends by focusing on regional banks and insurance providers, not the money center and investment banks that were dividend offenders during the crisis.
“The dividend growth focus of this ETF offers a nice combination of high exposure to traditional high-dividend paying defensive sectors as well as more cyclical sectors,” says Todd Rosenbluth, director of ETF research for S&P Capital IQ.
Dividend growth is useful on another front: As an inflation fighter. Since the early 1970s, when inflation ran as high as 11% per year, aggregate annual dividends of the S&P 500 have grown more than 1,000%, to $34.99 from $3.16 a share, according to the Wall Street Journal. [Fight Inflation With Dividend Growth ETFs]
SDY, which charges 0.35% per year, is up 1.6% this year. The ETF outperformed its peers for the past three and five years, according to S&P Capital IQ.
SPDR S&P Dividend ETF
