No market participant, professional or retail, has a crystal ball; none of us can predict the future. However, there are steps ETF issuers can take to position funds for long-term success. In other words, methodology matters. The ALPS O’Shares U.S. Quality Dividend ETF (OUSA) is a prime example of that.
The ETF, which follows the O’Shares U.S. Quality Dividend Index, focuses on dividend growth, reduced volatility and elevated quality traits — durable, all-weather characteristics that serve investors in a variety of market settings.
Some ETFs may check one or two of those boxes, but OUSA checks all three, which is something of a rarity among dividend funds. There are other interesting points regarding this $807 million ETF.
OUSA Roster Is Impressive
An ETF is only as good as its holdings, and that’s advice worth remembering with dividend funds, which investors often latch on to as long-term holdings. Speaking of the long-term, OUSA’s methodology has led to the ETF being home to some of the best-performing dividend stocks over the past decade. During that period, Microsoft (MSFT), the third-largest holding in the ALPS ETF, was the second-best dividend stock.
“The best-performing dividend stock in the last 10 years was Texas Pacific Land Corp (TPL). A $10,000 investment into TPL 10 years ago would be worth $210,000 today on a total return basis. Right behind TPL was Microsoft Corp (MSFT); investing $10,000 into MSFT back in 2015 would’ve turned into $112,890 with dividend reinvestment,” according to Y Charts.
That is to say OUSA is benefiting from a nearly 24% weight to tech stocks – an allocation that positions the fund to capture some of the upside generated by that high-flying sector as well as tech’s increasingly prominent dividend growth profile.
Microsoft isn’t the only high-flying dividend name of the past decade held by OUSA. Caterpillar (CAT), one of the ETF’s industrial holdings, ranks third on the Y Charts of the best dividend stocks of the past decade. Cintas (CTAS), another one of the ETF’s industrial members, ranks fourth on the list.
Costco Wholesale (COST) and Walmart (WMT), both of which are among OUSA’s consumer staples components, are also among the top 10 dividend payers in terms of performance of the past decade. Index provider and ratings agency S&P Global (SPGI), one of OUSA’s financial services members, also appears on the Y Charts list. Bottom line: This ETF’s methodology has led to it being home to some of the best dividends stocks of the past decade.
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