Analysts expect firms in the benchmark Russell 2000 index to generate double-digit profit gains throughout 2019. Profits across the Russell 2000 is expected to grow by almost 16% over the first quarter year-over-year after the 12.6% earnings growth rate expected in the final three months of 2018. Some even project the the small-cap benchmark to see profits surge to over 30% year-over-year in the fourth quarter of 2019.


Dividend growth rather than high yield can be a potent, less risky long-term income strategy. Company stocks that issue high dividend yields can be masking their distressed books or may not be sustainable and are heading for dividend cuts. Consequently, these quality dividend ETFs try to limit the impact of these value traps by requiring a history of sustainable dividend growth.

Additionally, the economy is still chugging along, albeit at a slower pace than before. Solid consumer confidence could also bolster the small-cap outlook, notably those that focus on the domestic economy, whereas big multinationals with a larger international footprint will have to suffer through a slowdown in Europe and Asia, along with the strengthening U.S. dollar that hurts foreign sales.

SMDV holds 61 stocks, 42% of which hail from the utilities and industrial sectors. The fund’s index yields 2.85%, or more than double the dividend yield on the Russell 2000 Index.

For more on core investing strategies, please visit our Core ETF Channel.