Investors have plenty of ETF options to consider in 2024, and an increasing number of active options therein. Active funds may appeal this year, especially after doing so well in 2023, but which active strategies stand out the most? An active ETF with an equity dividend focus like TDVG could do particularly well this year, no matter how many rate cuts hit.
See more: SMIDcap Stocks: 2024’s Big Opportunity?
TDVG, the T. Rowe Price Dividend Growth ETF, offers a compelling case for investors to consider its strategy. The active ETF relies on dividends not only as a source of current income but as a source of information. As an actively managed ETF charging only 50 basis points (bps), TDVG looks for firms with strong current dividends and dividend growth potential.
How does dividend growth history provide information? Many investors look to equity dividends as an additional source of income. This is especially during times of lower bond yields or volatile rate environments. However, equity dividends may also serve as a useful indicator for investors. In fact, dividends’ usefulness as an indicator may help investors more.
If the Fed cuts rates this year, investors may flock to firms best positioned to respond well. By seeking out dividend strength with growth potential, TDVG may find firms in a strong position to ride those cuts to growth.
By also looking for firms with sound balance sheets and cash flow, sustainable competitive advantages, and attractive valuations, it may be able to identify firms set to grow significantly in a kinder lending market.
TDVG, which launched in August 2020, has returned 23.7% over the last one-year period, per VettaFi data. Over the last three years, it has returned 9.8%, outperforming its ETF Database Category and Factset Segment averages. Taken together, it offers one more intriguing way to invest as 2024 continues to unfold.
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