Size Up SDOG as Global Dividends Move Toward $2 Trillion | ETF Trends

The outlook for global dividends in 2022 is beyond attractive with IHS Markit forecasting a move to $2.09 trillion in aggregate payouts from $1.97 trillion last year.

Not surprisingly, the U.S. is expected to be a leader in that growth, and that carries positive implications for an array of exchange traded funds, including the ALPS Sector Dividend Dogs ETF (SDOG). SDOG is structured as a high-dividend strategy, but its yield of 3.22% isn’t alarmingly high and implies some room for growth by way of components’ rising payouts.

“Though aggregate dividend payouts increased in 2021, the pandemic created starkly uneven paths across countries and sectors. Compared to their pre-pandemic level, dividends increased strongly in Asia Pacific, grew moderately in the Americas and saw a minimal rebound in Europe. Although the technology sector has boomed, travel, leisure and automotive still face an uphill climb,” said Clara Besson, EMEA dividend research lead, IHS Markit.

The research firm adds that regional and sector dividend gaps will again be present this year. Fortunately for investors, SDOG is a domestic ETF, allowing it to capitalize on what’s slated to be another banner year of payout growth in the U.S.

“Each region will see dividend payout growth, though the strength of the expansions will vary. Dividends in the U.S. are expected to increase 5.4 percent this year to 670 billion USD, led by the technology and healthcare sectors,” adds Markit.

SDOG equally weights its sector exposures so technology and healthcare combine for just over 20% of the fund’s roster. Financial services, which accounts for 10.32% of SDOG’s weight, is the largest dividend-paying sector in dollar terms, and payouts in that group are forecast to continue soaring this year.

Globally, “banks, the top dividend payer among sectors, will distribute more than 283 billion USD in payouts, with the expectation that banks will prefer buybacks over dividends payouts this year.” according to Markit.

The research firm forecasts nearly $50 billion in dividend growth from global oil and gas companies, which is a relevant point for SDOG investors because the fund allocates 10.3% of its roster to energy equities. That’s significantly greater than the exposure to that group found in the S&P 500 and Russell 1000 indexes.

Other high-dividend ETFs include the SPDR S&P Dividend ETF (SDY), the iShares Select Dividend ETF (NYSEArca: DVY), and the iShares Core High Dividend ETF (HDV).

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.