As companies find it harder to grow earnings in a slowing economy, exchange traded fund investors should focus on high-quality names to ride out this low growth environment.
On the upcoming webcast, Dividend Growers: High Quality Companies for a Low Growth Environment, Sam Stovall, Managing Director and U.S. Equity Strategist at S&P Global Market Intelligence, Simeon Hyman, Head of Investment Strategy at ProShares, and Kieran Kirwan, Director of Investment Strategy at ProShares, look to high-quality companies and dividend growth opportunities that can help investors participate in any upside while diminishing volatility in a low growth environment.
For instance, the ProShares Russell 2000 Dividend Growers ETF (NYSEArca: SMDV) tracks the Russell 2000 Dividend Growth Index. The underlying index includes small-cap firms with dividend increase streaks of at least a decade. SMDV shows a 2.06% 30-day SEC yield.
The ProShares S&P MidCap 400 Dividend Aristocrats ETF (NYSEArca: REGL) tracks the S&P MidCap Dividend Aristocrats Index, which only includes dividend paying companies that have raised payouts for 15 consecutive years. REGL has a 1.82% 30-day SEC yield.
Additionally, the ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) follows the S&P Dividend Aristocrats Index, which is comprised of S&P 500 companies that have increased their dividends for at least 25 consecutive years. NOBL has a 2.09% 30-day SEC yield.
The three dividend growth ETFs may be a better way for investors to capture the three market capitalization asset categories.
“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.”
Among dividend paying companies, those that have consistently increased dividends are ranked among an elite group of dividend payers. In recent years, these companies that have steadily raised dividends also outperformed firms that did not.
Year-to-date, SMDV increased 19.2% while the Russell 2000 Index gained 8.3%. REGL advanced 23.6%, whereas the S&P 400 MidCap Index rose 12.2%. NOBL rose 13.4%, compared to the 7.5% return for the S&P 500.
Financial advisors who are interested in learning more about dividend growth strategies can register for the Wednesday, August 3 webcast here.