Domestic dividends are racing back to heights last seen during the coronavirus pandemic and beyond, highlighting advantages with a variety of exchange traded funds, including the Invesco Dividend Achievers ETF (NASDAQ: PFM).
PFM tracks the NASDAQ US Broad Dividend Achievers Index, which mandates that member firms have payout increase streaks of at least 10 years. That’s a meaningful trait at a time when domestic payouts are growing and forecasted to continue doing so in 2022.
“The S&P 500 companies are estimated to increase their earnings by 6.5% next year, but the index would likely stay flat from today’s level, sitting around 4,600 points by the end of 2022, said Savita Subramanian, head of U.S. equity & quantitative strategy and ESG research at Bank of America,” reports Evie Liu for Barron’s.
When it comes to dependable dividend growth, that’s implicit with PFM due to the 10-year dividend increase streak requirement. However, several members of the ETF’s lineup go well beyond a decade’s worth of payout hikes. Some PFM member firms are flirting with or exceeding dividend increase streaks of 60 years.
That group includes Coca-Cola (NYSE:KO), Colgate Palmolive (NYSE:CL), Emerson Electric (NYSE:EMR), Johnson & Johnson (NYSE:JNJ), and Procter & Gamble (NYSE:PG). Coca-Cola, J&J, and Procter & Gamble are members of the Dow Jones Industrial Average.
P&G “offers a very solid dividend and is perhaps one of the safest consumer staples plays out there. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products companies. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn. Some of these are among the most valuable brands in the world,” reports Lee Jackson for 24/7 Wall Street.
PFM holds 350 stocks, indicating that there’s an expansive universe of dividend growth stocks, but there’s more to the story. Sector allocations are critical with dividend growth strategies. For its part, PFM allocates over 31% of its weight to the technology and healthcare sectors. Loaded with high-quality, cash-rich companies, those sectors grew dividends last year while some groups were cutting payouts due to the coronavirus pandemic.
PFM also allocates nearly 14% of its weight to financial services stocks — a group that’s a resurgent source of dividend growth. The Invesco fund devotes 38% of its weight to value stocks and about 11% to growth names. PFM features exposure to large-, mid-, and small-cap equities.
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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.
