Income generation in the current market environment can be challenging, as rising inflation weighs on real yields. Nevertheless, certain investors have persevered with dividend strategies that outperform inflationary pressures.
In the upcoming webcast, Yield vs Growth: How to Fight Inflation with Dividends, Matthew Page, Portfolio Manager, SmartETFs, will outline a strategy that provides consistent dividend growth at a rate that exceeds inflation.
Specifically, the SmartETFs Dividend Builder ETF (NYSE Arca: DIVS) is an actively managed dividend growth strategy that seeks dividend-paying companies that have provided an inflation-adjusted cash flow return on investment of at least 10% in each of the last 10 years. The ETF invests in approximately 35 dividend-paying companies globally.
The SmartETFs Dividend Builder ETF was recently converted from a mutual fund, the Guinness Atkinson Dividend Builder Fund (Nasdaq: GAINX). The strategy continues to be managed by Dr. Ian Mortimer and Matthew Page.
“DIVS invests with a quality bias. We seek companies that have growing dividends, persistently high rates of return on capital, and low levels of debt,” according to SmartETFs.
“DIVS offers access to high-quality dividend growers in a single transaction.”
The SmartETFs Dividend Builder ETF tracks global high quality dividend growers, or companies with a long history of persistently high return on capital. SmartETFs argues that traditional dividend strategies that focus on high dividend yield or a history of dividends are flawed approaches.
When building the DIVS portfolio, the portfolio managers perform a detailed review to seek persistent cash flow or companies that have achieved a real cash flow on investment of at least 10% on capital for each of the last 10 years. Companies have sound balance sheets or low levels of debt. Additionally, the portfolio managers target value or purchase shares at a time when target companies are trading at the low end of their peers, low end of their history, and low end of their industries.
Financial advisors who are interested in learning more about dividend strategies can register for the Tuesday, June 29 webcast here.