Another Strong Quarter Supports Buoyant Dividend Growth Outlook

Stocks slumped in the first quarter, and that theme is carrying over through the first two months of the second quarter, but one of the obvious bright spots is dividends.

To be specific, dividend growth. The latest reading of the Janus Henderson Global Dividend Index indicates that payout growth among U.S. firms was robust in the first three months of the year.

“Nearly every US company in the Index (99%) increased their payments or held them steady, as dividends continued to be a reliable source of income growth for shareholders,” according to a statement issued by Janus Henderson.

Investors can choose from hundreds of dividend-oriented exchange traded funds, but not all are designed to identify reliable sources of dividend growth. WisdomTree offers an extensive lineup of ETFs designed to do just that. Its products focusing on domestic large-cap dividend equities include the WisdomTree US Quality Dividend Growth Fund (DGRW), the WisdomTree U.S. LargeCap Dividend Fund (DLN), and the WisdomTree U.S. Total Dividend Fund (DTD).

“Globally, first quarter dividends jumped by 11% on a headline basis to a total of $302.5bn, also a record for the seasonally quieter first three months of the year. Underlying growth was even stronger at 16.1%. Janus Henderson’s analysis shows that dividends have more than doubled since 2009, when the Index launched,” added the firm.

Against that compelling payout backdrop, each of the aforementioned WisdomTree ETFs are relevant. In the case of DGRW, that fund employs growth traits, including return on assets (ROA) and return on equity (ROE), in an effort to identify steady dividend growers. By using those metrics, not only does DGRW eschew simply focusing on a company’s payout increase streak, it identifies firms with the balance sheets necessary to sustain and grow dividends.

DLN and DTD, both of which turn 16 years old in two weeks, are dividend-weighted — a methodology that presents investors with an avenue for forecasting what dividends among the ETFs’ holdings will look like in the year ahead. Whether it’s DGRW, DLN, or DTD, these ETFs offer investors credible avenues for participating in payout growth.

“Nevertheless, the inclusion of the robust Q1 numbers increases the forecast slightly for the year. For 2022, Janus Henderson now expects global dividends to reach $1.54 trillion, a headline increase of 4.6%, equivalent to a 7.1% increase on an underlying basis,” concluded Janus Henderson.

Indicating that dividends are difference makers, all three of the WisdomTree ETFs highlighted are trouncing the S&P 500 this year. Year-to-date, both DLN and DTD are beating the S&P 500 by more than 1,200 basis points.

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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.