The market has been turbulent of late, due to the many unknowns on the horizon, including inflation, the delta variant, and political turmoil. Dividend growth ETFs can be useful tools to provide reliable, safe income in uncertain times, while also serving as the foundation of a long-term income growth strategy.
The SmartETFs Dividend Builder ETF (DIVS) is one such dividend growth fund. The fund, which is up 5.31%, aims to provide investors with moderate cash flow via dividends that grow at a rate that is faster than inflation.
Many dividend-focused ETFs focus on high yielding stocks and historic dividend levels to determine what securities should go into their portfolio. DIVS instead focuses on economic fundamentals, such as cash flow, dividend history, and low levels of debt. The fund managers also strategize the purchasing of their holdings, seeking to catch companies when they are undervalued.
Holdings Roster Include Familiar Stalwarts and Surprising Depth
Actively managed, DIVS holds in its portfolio approximately 35 large and mid-cap global stocks, in roughly equal weights.
Current holdings include familiar dividend stocks such as Microsoft (MSFT), Blackrock (BLK), and PepsiCo (PEP) but also some other quietly productive firms.
DIVS’s largest holding is Otis Worldwide Corp (OTIS), an elevator repair and manufacturing company who just reported a strong first half of the year in their 2021 2Q earnings call.
“New Equipment orders grew in all regions and were particularly strong in the Americas, up nearly 50% with an over 4 times increase in major project bookings versus the prior year,” said president and CEO Judith Marks. “This strong first half performance, including robust free cash flow generation in excess of 150% of net income, enables us to return additional cash to shareholders.”
Other holdings, such as ABB Ltd. (ABBN) are also performing strongly. ABBN is up 44.23% over a one-year period.
Roche Holdings Ltd., meanwhile, is a Swiss pharmaceutical company that has been producing COVID tests and treatments.
DIVS: Once A Mutual Fund, Now An ETF
DIVS is also notable in that the fund was, until this year, trading as a mutual fund. In March, DIVS’s issuer, Guinness Atkinson, underwent the process of converting the mutual fund to an ETF structure.
DIVS has an expense ratio of 0.65%.
For more information, visit the Dividend ETF Channel.