Dividend growth stocks and related ETFs may not be too eye-catching, but the strategy’s stable nature helps investors garner steady returns.
“For us, we focus on dividend growth strategies, not the highest of yielders, but the companies that are consistently growing their dividends,” Simeon Hyman, Head of Investment Strategy for ProShares, said. “It gives you a very consistent profile of companies that can grow but also have a lot of downside protection as well because of the robustness of their business model – moats if you will.”
For example, the S&P 500 Dividend Aristocrats ETF (NOBL) participated in the FANG driven or technology driven market rally last year without actually having exposure to the riskier nature of the tech segment. The ETF only includes a 1.9% tilt toward the information technology sector and came in a hair’s breadth short of the benchmark S&P 500’s performance last year.
The ProShares S&P 500 Dividend Aristocrats ETF tries to reflect the performance of the S&P 500 Dividend Aristocrats Index, which focuses exclusively on companies in the S&P 500 that have grown dividends for at least 25 consecutive years. NOBL’s index, the S&P 500 Dividend Aristocrats, has outperformed the S&P 500 with lower volatility since its inception. The fund is part of the largest suite of ETFs focused on dividend growers, covering U.S. and international markets.
The ProShares S&P 500 Dividend Aristocrats ETF includes 53 companies with a dividend yield of 2.34%. Top holdings include McCormick & Co 2.2%, S&P Global Inc 2.1%, W.W. Grainger 2.1%, Cintas 2.1% and General Dynamics 2.1%. Top sector weights include consumer staples 24.5%, industrials 17.3%, health care 11.0%, consumer discretionary 11.0% and materials 9.6%.
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