Companies that have consistently raised dividends also exhibit stable balance sheets and consistent earnings growth. And SDY provides consistent dividend growth via its underlying index, which mandates member firms have dividend increase spanning at least 20 years.
Company stocks that issue high yields may be masking their distressed books or may not be sustainable and are heading for dividend cuts. On the other hand, these quality dividend ETFs try to limit the impact of these value traps by selecting components based on a history of sustainable dividend growth.
“Another interesting element to PEY is that although it only holds 50 stocks, its weight spreads out well through the various market cap spectrums. For example, PEY devotes nearly 24% of its weight to small-cap stocks and 41% to mid-cap stocks. Those are large allocations to mid-caps and small-caps relative to other dividend ETFs that are not exclusively devoted to those types of stocks,” adds InvestorPlace.
PEY yields nearly 3.3% on a trailing 12-month basis and costs 0.54% per year.
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PowerShares High Yield Equity Dividend Achievers Portfolio
