Investors should look to dividend exchange traded fund strategies as we see more volatile market conditions with uneven growth ahead.
“Those focused on dividend growth, particularly outside the traditional domestic large-cap space, have delivered strong performance in an otherwise challenging environment,” according to ProShares.
However, not all dividend strategies are created equal. Looking ahead, investors may take a look at mid- and small-cap dividend growth strategies that have shown strong potential. While mid- and small-cap stocks may exhibit greater volatility compared to large-cap names, a dividend growth strategy targets quality companies and may help diminish the swings.
“Higher-quality companies tend to have stronger balance sheets and a potentially greater ability to withstand stormy market environments,” according to ProShares. “Focusing on higher-quality companies may be a sensible strategy in current market conditions, since quality has tended to outperform in periods of heightened volatility.”
For instance, investors can consider the ProShares Russell 2000 Dividend Growers ETF (NYSEArca: SMDV) and ProShares S&P MidCap 400 Dividend Aristocrats ETF (NYSEArca: REGL) to gain exposure to a group quality, dividend-paying small- and mid-cap companies.