With interest rates stuck near historical lows, retirees may find it harder to meet their income needs through bonds alone. Instead, more should think about adding dividend-paying stocks and related exchange traded funds to bolster yields.
Dividend stocks and ETFs may also enjoy dividend growth, along with capital appreciation, which could also help an investor maintain his or her nest egg longer. Consequently, with a larger portion of retirement money invested in dividend stocks, an investor would not be forced to withdraw, or sell off assets, from his or her portfolio as quickly to meet annual income needs, assuming if total yields fall short of the target 4% withdrawal rate. [ETF Options to Generate Income for Retirement]
Of course, dividend growth and consistency of that growth is of the utmost importance. The ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) is one of the dividend aristocrats ETFs. Dividend aristocrats are those S&P 500 members that have increased dividends for at least 25 consecutive years.
When building a diversified investment portfolio, investors may turn to various dividend-paying stock exchange traded funds to generate some extra income.
In an environment of near-zero interest rates and quantitative easing, dividend stocks have attracted investors seeking a better source of income, Ben Johnson, director of global ETF research at Morningstar, said.
“What makes NOBL different from other dividend ETFs is that the fund equally weights its holdings, which reduces concentration risk,” reports Newsmax.
NOBL is also lightly allocated to the utilities and telecom sectors, meaning the ETF is not as vulnerable to rising interest rates as are some rival dividend funds.