Dividend growth stocks and exchange traded funds (ETFs) have helped investors access quality market exposure with attractive yields as well.
“With dividend growth strategies, you get quality companies that have delivered strong returns. You also get the potential for attractive effective yields,” according to a ProShares note.
For example, the rate of dividend growth for the S&P 500 Dividend Aristocrats Index has been 1.0% greater than the S&P 500 since 2005. The S&P 500 Dividend Aristocrats Index has also generated an effective yield of 3.5% five years ago in 2011, or 1.4 percentage greater than the effective yield generated by the broader market.
The S&P 500 Dividend Aristocrats Index acts as the underlying index for the popular ProShares S&P 500 Aristocrats ETF (BATS: NOBL) and is comprised of companies that have consecutively raised dividends for at least 25 years. NOBL currently shows a 1.98% 12-month yield, according to Morningstar data.
ProShares also offers the ProShares Russell 2000 Dividend Growers ETF (BATS: SMDV) and the ProShares S&P MidCap 400 Dividend Aristocrats ETF (BATS: REGL) for those seeking quality dividend growers in the small- and mid-cap categories, respectively.
Like, NOBL, REGL tracks a Dividend Aristocrats Index. The mid-cap Dividend Aristocrats Index, though, only requires 15 consecutive years of increased dividends for inclusion. The ETF has a 1.28% 12-month yield.
SMDV, a dividend spin on the Russell 2000, the benchmark U.S. small-cap index, tracks the Russell 2000 Dividend Growth Index. The index includes small-cap firms with dividend increase streaks of at least a decade. SMDV has a 1.37% 12-month yield.
Investors can also diversify into international markets while tracking similar dividend growth strategies. For instance, the ProShares MSCI EAFE Dividend Growers ETF (BATS: EFAD) tracks developed market Europe, Australasia and Far East companies that exhibit a minimum dividend increase streak of 10 years. EFAD has a 2.35% 12-month yield.
The ProShares MSCI Europe Dividend Growers ETF (BATS: EUDV) tracks the performance of the MSCI Europe Dividend Masters Index, which consists of at least 25 European companies that have consistently increased their dividends for at least 10 consecutive years. EUDV has a 1.87% 12-month yield.
The ProShares MSCI Emerging Markets Dividend Growers ETF (BATS: EMDV) follows the MSCI Emerging Markets Dividend Masters Index, which targets MSCI Emerging Market components that have increased dividend payments each year for at least seven consecutive years. EMDV has a 2.42% 12-month yield.
For more information on dividend stocks, visit our dividend ETFs category.