ETF Trends publisher Tom Lydon spoke with Simeon Hyman, Head of Investment Strategy at ProShares, at the Inside ETFs conference that ran Jan. 22-25, 2017. They talked about ProShares’ dividend growth strategies, notably its popular ProShares S&P 500 Aristocrats ETF (BATS: NOBL), which tracks the S&P 500 Dividend Aristocrats Index of companies that have consecutively raised dividends for at least 25 years.
Nevertheless, investors are not limited to large-cap dividend payers from the S&P 500.
“The dividend growth strategy works very effectively in mid- and small-cap stocks as well,” Hyman said.
Like, NOBL, REGL tracks a Dividend Aristocrats Index. The mid-cap Dividend Aristocrats Index, though, only requires 15 consecutive years of increased dividends for inclusion.
SMDV, a dividend spin on the Russell 2000, the benchmark U.S. small-cap index, tracks the Russell 2000 Dividend Growth Index. That index includes small-cap firms with dividend increase streaks of at least a decade.
REGL and SMDVs portfolios are constructed much like NOBL’s, with the companies that pass the dividend growth screen equally weighted subject to a maximum sector weight of 30%.
While smaller company stocks had lagged their larger counterparts coming out of the financial crisis, 2016 saw strong small-cap stock performance.
“They are coming back,” Hyman said. “Of course they should be part of an evergreen asset allocation, but in the near-term, folks are talking about Trump-onomics.