With the Fed reiterating the higher for longer case this week, investors may be reassessing their plans. The Fed seems set to hold the Federal Funds rate steady at around 5.3% at their two-day policy meeting this week. Given that many investors were likely anticipating rate cuts, that represents a big change of plans. Quality dividends may provide one alternative option adding a combination of current income and quality equities.
See more: Bull vs Bear: Will Rate Cuts Still Happen This Year?
Dividend investing offers a steady distribution of income. What’s more, dividends can be reinvested, offering the opportunity to steadily grow an equity slice. Finally, quality dividends offer more than just income for daily costs or for reinvestment. They can also indicate whether firms are in a good place. Companies offering steady or even growing dividends can signal a healthy overall outlook.
SS&C ALPS Advisors offers a variety of strategies focused on quality dividends. For example, investors can consider the ALPS O’Shares U.S. Quality Dividend ETF (OUSA). OUSA charges 48 basis points (bps) to track the O’Shares US Quality Dividend Index.
The ETF weights its large-cap U.S. stocks by high quality, low volatility, high dividend yield, and dividend quality. OUSA creates an overall ranking score for each security in which it invests. It also adds a 5% cap for each security and a 22% sector weight cap.
Together, that approach has helped OUSA return 19.3% over one year per SS&C ALPS Advisors. It has also returned 10.2% over five years, solid long-term returns when added to its dividend distributions.
Quality dividends offer notable signals and helpful current income for investors. Though the economy remains steady in 2024, investors of all kinds, from those nearing retirement to just entering investing, can benefit from dividends. For investors on the lookout, strategies like OUSA then may stand out as a potent route into the space.
vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for OUSA, for which it receives an index licensing fee. However, OUSA 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 OUSA.
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