Many have looked to middle-capitalization stocks, or the so-called sweet spot in the equities market, and income-minded investors can also hone in on this segment through a quality dividend growth exchange traded fund.
Mid-caps have been traditionally referred to as the sweet spot between large- and small-cap stocks due to their lower risk profile when compared to smaller companies and their greater potential return when compared to larger firms.
According to Morningstar data, the S&P MidCap 400 returned 8.96% based on annualized total returns for the 10-year period ended March 31, 2017, whereas the S&P 500 gained 7.51% and Russell 2000 rose 7.12%.
This sweet spot has also outperformed other asset categories over time, and focusing on dividend payers may help investors garner enhanced total returns over the long haul.
“Filtering for consistent dividend growth may make that mid-cap sweet spot even sweeter,” according to a ProShares note.