Investors enjoy getting paid to wait. Through exchange traded funds, anyone may gain access to quality stocks with strong fundamentals and attractive yields.
Dividends are a nice perk when investing, but investors should not go overboard and chase after high yields as generous dividends may often signal weak share price tied to negative views.
On the other hand, investors may comb through various financial data to assess a company’s health and its ability to pay steady yields. However, the process is tedious and time consuming.
Luckily for ETF investors, there are a number of diversified dividend-themed ETFs that implement specific criteria in selecting components.
For instance, Northern Trusts’ FlexShares offers a line of quality dividend ETFs that utilize a multi-faceted Dividend Quality Score, including the FlexShares Quality Dividend Index Fund (NYSEArca: QDF), FlexShares Quality Dividend Defensive Index Fund (NYSEArca: QDEF), FlexShares Quality Dividend Dynamic Index Fund (NYSEArca: QDYN), FlexShares International Quality Dividend Index Fund (NYSEArca: IQDF), FlexShares International Quality Dividend Defensive Index Fund (NYSEArca: IQDE) and FlexShares International Quality Dividend Dynamic Index Fund (NYSEArca: IQDY).
QDF has a 3.0% 12-month yield. QDEF has a 3.00% 12-month yield. QDYN has a 3.92% 12-month yield. IQDF has a 4.23% 12-month yield. IQDE has a 4.90% 12-month yield. IQDY has a has a 4.08% 12-month yield.
Specifically, the quality dividend ETFs screen for management efficiency, profitability and cash flow. Each company has to show management efficiency, or firms that efficiently deploy capital and make smart financing decisions. Companies with wider profit margins are better positions to grow and maintain dividends than those with slimmer margins. Additionally, firms that can meet debt obligations and day-to-day liquidity needs are better capable of maintaining dividends.