SEE MORE: Fidelity’s New Spin on a Dividend ETF
Consequently, given the strengthened growth outlook, some are anticipating the Federal Reserve to hike interest rates to keep the economy from overheating.
Meanwhile, Trump may also stimulate inflationary pressures through policy changes such as new barriers to imports.
“We have added U.S. break-even inflation exposure to the portfolio post the Trump win,” Andrew Harman, portfolio manager at First State Investments Ltd., told Bloomberg. “U.S. inflation pressures are expected to be an on-going theme.”
Dividend growth as a means of trumping inflation could and arguably should serve to highlight the advantages of the ETFs that focus on dividend growth stocks, such as FDRR. That group is comprised of well-established ETFs that emphasize dividend increase streaks as well as a new breed of funds that look for sectors chock full of stocks that have the potential to be future sources of dividend growth.
Stocks with steady yields reassure investors of a company’s strong financial health. Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return. Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
For more information on dividend stocks, visit our dividend ETFs category.