Are 2020's Dividend Storms in the Rearview Mirror? | ETF Trends

Following a rough first half of 2020, dividends are on the mend as many companies are again displaying confidence and comfort in boosting payouts.

Advisors can tap into renewed dividend growth with the WisdomTree Global Dividend Model Portfolio.

“This model portfolio seeks to provide capital appreciation and high current dividend income, through a globally diversified set of WisdomTree’s dividend income oriented equity ETFs. The model strives to deliver dividend income in excess of the global benchmark of equities,” according to the issuer.

The model portfolio is relevant as it appears the worst of 2020’s dividend storms are in the rearview mirror.

“Companies are growing more confident in growing dividends again, even as another surge in Covid-19 cases threatens earnings. This could mark a nice opportunity for income-seeking investors,” reports Jacob Sonenshine for Barron’s.

More Model Portfolio Advantages

The Global Dividend Model Portfolio features nine exchange traded funds, five of which focus on ex-U.S. dividend payers.

Ex-U.S. developed market dividend payers often feature larger yields than their U.S. counterparts, an assertion proven by comparing large- and mega-cap dividend stocks from familiar dividend sectors such as consumer staples, energy, financial services, and telecommunications.

One of the model portfolio’s international positions is the WisdomTree International SmallCap Dividend Fund (DLS). DLS seeks to track the price and yield performance of the WisdomTree International Small-Cap Dividend Index, which is comprised of the small-capitalization segment of the dividend-paying market in the industrialized world outside the U.S. and Canada.

DLS YTD Performance

Fortunately, the model portfolio’s domestic exposures are also looking more compelling as payouts here rebound.

“And now S&P 500 per-share earnings are expected to bounce 22% in 2021—to above 2019 levels—according to FactSet estimates. As a result, companies are feeling better about returning more of their capital to shareholders,” according to Barron’s.

As we consider what may lie ahead for markets, income-minded investors can consider the dividend landscape and dividend growth exchange traded fund strategies that have exhibited strong performance characteristics under a wide range of market conditions.

“S&P 500 dividends are expected to grow 3% in 2021 from 2020, according to FactSet. The payout ratio—the percent of earnings companies use to pay dividends — is expected to fall to about 35% from 42%, but the pure growth in dividend dollars still provides an attractive yield opportunity at current prices,” according to Barron’s.

For more on how to implement model portfolios, visit our Model Portfolio Channel.

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.