These are exciting times for dividend investors, and with payout expectations running almost as hot as summer temperatures, the SmartETFs Dividend Builder ETF (DIVS) could keep on growing.
DIVS is an actively managed ETF, and while investors have their choice of dozens of passively managed dividend funds, the active management available with DIVS could be attractive at a time when payouts are forecast to hit new highs.
“The current working view for S&P 500 dividends continued to improve (aided by Fed approval for higher dividends in the second half), as COVID-19 vaccine availability was plentiful (with concern over those who did not want to be vaccinated), permitting a wider reopening of America,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
The Dynamic DIVS ETF
As has been widely noted, with the blessing of the Federal Reserve, financial services companies are back to boosting payouts and buying back shares. DIVS currently allocates 5% of its weight to that sector.
While that’s a positive trait, there’s more to like with the DIVS story, including the fact that the ETF isn’t solely focused on yield. Rather, DIVS management team emphasizes companies’ balance sheets and cash flow-generating capabilities as avenues for identifying firms with the potential to grow payouts over the long haul.
On that note, DIVS has a 12% weight to pharmaceutical stocks, its largest industry weight. Healthcare stocks are inexpensive today and the sector, particularly the pharmaceuticals corner, is home to an array of cash-rich companies with long histories of growing payouts regardless of the macroeconomic environment.
DIVS also merits consideration as a play on economic growth and good news on the coronavirus vaccination front. The percentage of American adults that have received at least one jab of a COVID-19 vaccine recently hit 70%.
“If vaccinations continue and the economy reopens, Silverblatt expects dividend payments to increase 5% for 2021, which would be a new annual record payment,” reports Hannah Miao for CNBC.
For more news, information, and strategy, visit the Dividend Channel.
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.