• Dividend Growers Outperformed over the Entire Period: Yields rose by 67 basis points over the full period, and during that time, dividend growers outperformed both yielders and core dividends.
Consider Focusing on Dividend Growers
Given the prospects of rising interest rates in 2015, and the fact that dividend growers outperformed during these periods, we think it would be wise for investors to consider dividend-growth-focused indexes. So, what should you look for in a dividend growth index? In our opinion, screening dividend-paying equities based on earnings growth and quality factors provides substantial sector differences compared to a broadly focused index or an index that screens based on dividend yield. This is important as we expect the higher growth expectations and increased exposure to cyclical sectors could become more desirable with improving economic activity and rising rates.
1Source: Bloomberg, 4/30/13–8/31/14.
2References the WisdomTree Equity Income Index.
3References the WisdomTree LargeCap Dividend Index.
4References the WisdomTree U.S. Dividend Growth Index.
Important Risks Related to this Article
Dividends are not guaranteed, and a company’s future ability to pay dividends may be limited. A company currently paying dividends may cease paying dividends at any time.