Many investors large-cap stocks are the best ideas for dividends, particularly when it comes to consistent dividend growth. After all, there are large-cap dividend exchange traded funds (ETFs) that require companies to have minimum dividend increase streaks of 10, 20 or even 25 years.
As proven by the ProShares S&P MidCap 400 Dividend Aristocrats ETF (CBOE: REGL), mid-cap funds can play that game and play it well. REGL, which recently turned four years old, follows the S&P MidCap 400 Dividend Aristocrats Index. That is the dividend aristocrats offshoot of the widely followed S&P MidCap 400 Index. REGL’s components, which currently number 52, are required to have minimum dividend increase streaks of 15 years.
Regardless of market cap spectrum, dividend increase streaks of 15 years are impressive, but many of REGL’s holdings far exceed the ETF’s minimum threshold for inclusion.
Long Traditions
A recent breakdown of REGL’s holdings by length of dividend increase streaks indicate seven of the fund’s components have boosted payouts for 45 or more consecutive years. Two of those stocks are utilities names and another two hail from the consumer staples sector. Those sectors combine for more than 23% of REGL’s weight.
Nine of REGL’s member firms have dividend increase streaks of 35 years to 44 years. A third of those names are industrial stocks. That sector is the ETF’s second-largest sector weight at 19.51%.
Fourteen of REGL’s holdings have dividend increase streaks ranging from 25 years to 34 years. Five of those 14 stocks are financials services names. That sector is REGL’s largest sector exposure at 26.68%. A minimum dividend increase streak of 25 years is important because that is the requirement for entry into REGL’s large-cap cousin, the ProShares S&P 500 Aristocrats ETF (CBOE: NOBL), indicating that if some of REGL’s holdings eventually matriculate to large-cap status, those stocks could reside in NOBL’s underlying index.
Twenty-two of REGL’s holdings have dividend increase streaks of 15 to 24 years, indicating that some of the fund’s holdings are recent additions while others are fast approaching a quarter century of boosting dividends.
REGL has a dividend yield of 1.86%, or 67 basis points above the yield on the S&P MidCap 400 Index.
For more information on middle capitalization stocks, visit our mid-cap category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.