Dividends have stood out as a key investing theme over the last 12 months. Their ability to equip portfolios with consistent, current income initially stood out as a solution for expected volatility. 2023’s rally has, of course, lessened the need for such portfolio ballast, but dividends benefit from rallies, too. Reinvesting dividend cash into other dividend stocks can appeal, inviting investors to consider three dividend stocks available in the ALPS Sector Dividend Dogs ETF (SDOG).
SDOG tracks the S-Network Sector Dividend Dogs Index and charges a 36 basis point fee for its services. It’s produced a 4.1% annual dividend yield, too, outdoing SDOG’s ETF Database category average and its FactSet segment average. Together, it’s helped the ETF return 5.1% over the last month, also outperforming its averages in that metric.
Starting off, consider SDOG’s top holding, Stanley Black & Decker (SWK). SDOG weights SWK at 2.2%, more than any other stock in the ETF’s portfolio. SWK has risen 23.9% YTD, up $18.17 in that time. SWK, of course, manufactures industrial tools and household hardware, and recently hit a golden crossover. Its 50-day simple moving average (SMA) rose above its 200-day SMA this month, with the overall stock price well above both.
That indicates continued positive momentum for the firm. In this case, despite a very high forward price-to-earnings ratio, it still looks set for consistent dividends. Per YCharts, it offers a 3.38% forward dividend yield. With U.S. manufacturing spiking, tool purchases could rise, too.
The Benefits of Dividend Stocks
Next, investors will recognize the status of a holding like Intel (INTC). INTC is up 24.6%, adding $6.57 to its stock price. INTC offers a smaller forward dividend yield than SWK does, but it is also sending a key buy signal. The stock’s price sits well above both its 50- and 200-day SMAs. INTC of course works in the world of semiconductors, which, despite a tough 2023, is still poised for a decade of growth.
Finally, the tried and true world of medical devices merits a look in Medtronic (MDT). The medical devices company has grown 12.85% YTD. MDT has also seen solid tech indicator action over the last month or so, with a 3.18% forward dividend yield. What’s more, it also has an appealing forward p/e ratio of 17.49.
Taken together, SDOG offers a diverse set of exposures via its “sector dividends” approach. That investing plan seeks out dividends in equally weighted sectors, diversifying away from traditional dividend-payers like utilities and financials. That sets SDOG apart from some rivals like the SPDR S&P Dividend ETF (SDY).
For more news, information, and analysis, visit the ETF Building Blocks Channel.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for SDOG, for which it receives an index licensing fee. However, SDOG is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of SDOG.