TIME’s Dividend Kings List of 2024 includes an elite group of stocks that have been increasing their dividends over at least a 50-year time span. A few of those are part of the top 10 holdings found in the ALPS Sector Dividend Dogs ETF (SDOG).
In a market dominated by high-flying tech stocks capitalizing on the artificial intelligence (AI) theme of today. This group of dividend kings have the proven staying power to back up their market relevance in today’s big tech dominance.
Among the list of dividend kings, TIME mentioned three in particular: 3M, Altria, and Genuine Parts Co. All three of these companies are found in SDOG’s portfolio. SDOG weighs them all around 2%, which is a part of the fund’s inherent strategy.
That said, SDOG tracks the S-Network Sector Dividend Dogs Index, which brings an equal-weight strategy to the “Dogs of the Dow” approach. As such, it eschews over-concentrating one a few names that could bring violent market swings when volatility strikes.
“Dividend stocks tend to be less volatile than non-dividend payers, making them a good option during bear markets,” TIME said. “Still, including dividend stocks in your portfolio can be wise any time as part of a well-diversified, wealth-building portfolio.”
With potential rate cuts ahead, the option of dividends becomes even more compelling. As yields start to fall, fixed income investors in particular could be searching for other avenues of income. Dividend stocks may be just what they are looking for.
One approach to building a portfolio of dividend king stocks is to simply peruse the list and handpick them for a portfolio. A simpler approach is to choose a fund like SDOG that includes these names as part of their holdings.
“You can also invest in dividend kings indirectly via ETFs and mutual funds that hold some of the kings,” TIME confirmed.
Outperforming the Broad Market
Stable dividends aren’t the only benefits associated with dividend-producing stocks. They also tend to outperform the broader market. This gives investors the dual benefit of price appreciation in tandem with dividend distributions.
“Companies that consistently grow their dividends have traditionally outperformed the broader market,” the TIME report added further, citing a report a report from RMB Capital, saying that “dividend kings delivered an annual average return of 9.62% from 1972 to 2018 versus a 2.40% return for non-dividend payers.”
For more news, information, and analysis, visit the ETF Building Blocks Channel.
