Dividend ETFs have seen a surge in popularity over the last year and a half, with the spurt in demand largely attributed to the unique pressures of the pandemic and current economic environment.
With 149 ETFs currently available on the U.S. markets, dividend ETFs have total assets under management of $309 billion, according to FactSet data.
The actively managed Amplify CWP Enhanced Dividend Income ETF (DIVO) this week crossed the threshold of $1 billion in assets under management, following steady growth in inflows since it gained attention in August 2020.
Despite being on the market since 2016, DIVO did not pick up steam until four years later, as demand from investors and advisors began shifting toward income-generating ETFs, as well as actively managed funds.
The annual dividend yield of DIVO is 4.92%, according to ETF Database.
Historically, investors who turn to dividend ETFs are generally those looking for low-risk investments, as well as retirees who want a regular income, but the current environment has increased dividend ETFs’ appeal across all demographics.
Many investors believe and appreciate that companies that return profits to shareholders through dividends are typically more stable blue-chip companies.
When searching for income-generating investments, dividend ETFs have advantages over the traditional fixed income offerings. Stocks are riskier than bonds; however, they provide a fairly reliable source of income plus the possibility of capital appreciation over time.
The growth of income that’s unique to stocks is their key —and significant — advantage over bonds and fixed income ETFs.
In addition to DIVO, there are several other dividend ETFs available on the market, including the SmartETFs Asia Pacific Dividend Builder ETF (ADIV), the Guinness Atkinson SmartETFs Dividend Builder ETF (DIVS), and the BlackRock iShares Global 100 ETF (IOO).
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