“In this environment Goldman recommends exposure to stocks with growing dividends, which could be facilitated by record levels of cash on corporate balance sheets that would motivate many firms to increase dividends to shareholders ‘at a much faster clip,’” according to ValueWalk.
Some ETFs that emphasize dividend growth have fared better than their high-yield counterparts. For example, the ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) has climbed almost 2% this year. NOBL tracks the S&P 500 Dividend Aristocrats Index, which includes members of the S&P 500 that have increased their dividends for a minimum of 25 consecutive years.
Investors have added nearly $213 million to NOBL this year. While the ETF does allocate 27% of its weight to staples stocks, its largest sector, its utilities weight is scant at less than 1.9%. Additionally, NOBL has the potential to be durable if rates rise due to robust exposure to cyclical sectors, such as consumer discretionary, materials and industrials. NOBL also has an 11.3% weight to the financial services sector. Nearly 15 financial services ETFs made new 52-week highs on Tuesday.
ProShares S&P 500 Aristocrats ETF
Tom Lydon’s clients own shares of DVY.