Legg Mason is putting the final touches on a suite of smart-beta ETFs, including the Legg Mason Low Volatility High Dividend ETF. The Low Volatility High Dividend ETF, like the name suggests, targets high dividend yield companies, with a lower price and earnings volatility. Specifically, companies must demonstrate profitability over the pas four fiscal quarters, and stocks whose yields are not supported by earnings are excluded. [Legg Mason Crafting Four Smart-Beta, Index-Based ETFs]
Genoni also pointed out that dividend-paying stocks have historically exhibited lower sensitivity to the broad market or exhibit lower volatility, which can lead to lower drawdowns in a declining market. Additionally, investors may still capitalize on equity risk premium as dividend stocks typically provide higher-than-inflation growth.
While the Legg Mason Low Volatility High Dividend ETF has not hit the market yet, investors can take a look at the PowerShares S&P 500 High Dividend Low Volatility Portfolio (NYSEArca: SPHD) in the meantime. SPHD takes 50 S&P 500 stocks that have historically provided high dividend yields and low volatility. The PowerShares ETF has a 3.47% 12-month yield.
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.