Through the first half of 2026, artificial intelligence (AI) and technology continued dominating the U.S. equity landscape, prompting some investors to gloss over the long-term value of dividend growth investing. With the second half upon us, market participants might want to reconsider that perspective.
That could prove to be sound advice at a time when many market observers remain bullish on equities while citing a long awaited widening of market breadth. Said another way, there’s evidence that non-growth sectors, such as financial services and healthcare, are contributing to broader market upside. Investors that want to get in on that act while generating dependable equity income may want to evaluate ETFs such as the Invesco High Yield Equity Dividend Achievers™ ETF (PEY).
In quiet fashion, the $1.1 billion PEY is up nearly 16% year-to-date, soundly outpacing the 8.9% returned by S&P 500-tracking ETFs. Under any circumstances, that’s an impressive feat. It’s even more noteworthy considering that PEY, turning 22 years old in December, devotes just 2.66% of its weight to tech stocks.
Getting Paid With PEY
As the ETF’s name implies, it is a high-dividend strategy, highlighted by a 30-day SEC yield of 4.56%. However, the fund isn’t just a high-yield affair. It tracks the NASDAQ US Dividend Achievers™ 50 Index, which includes stocks based on both yield and dividend growth consistency. The latter point is important because it can set up patient investors for long-term success.
“Stocks with a history of dividend growth, on the other hand, could present a compelling investment opportunity in an uncertain environment,” noted S&P Dow Jones Indices. “An allocation to companies that have sustainable and growing dividends may provide exposure to high-quality stocks and greater income over time, therefore buffering against market volatility and addressing the risk of rising rates to some extent.”
PEY is heavily allocated to sectors known for steadily rising payouts. For example, the ETF devotes 43% of its weight to financial services and consumer defensive names. The former’s dividends have trended higher in recent years as big banks ace regulatory “stress tests” in the U.S.
PEY, which pays a monthly dividend, offers other advantages, including the potential for both long-term capital appreciation and reduced volatility. Those factors may explain why there remains a broad audience for dividend growth strategies.
“One of the most attractive features of dividend growth stocks is the potential for rising income. Companies that consistently increase their dividends provide investors with a growing stream of income over time,” noted Clark & McCaffrey Wealth Management of Raymond James. “This can be especially beneficial for retirees who rely on investment income to cover living expenses. Unlike fixed-income investments, such as bonds, which pay a set interest rate, dividend growth stocks can help your income keep pace with inflation, preserving your purchasing power.”
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