Owing in large part to the coronavirus pandemic, 2020 was a dismal year for dividend growth around the world, but domestic dividends got their grooves back in 2021.
Regarding the S&P 500, “Q4 2021 U.S. common dividend increases were $20.6 billion, down 7.5% from $22.2 billion in Q3 2021 and up 48.5% from $13.9 billion in Q4 2020,” says S&P Dow Jones Indices. “Net indicated dividend rate change increased $18.0 billion, compared to $20.9 billion in Q3 2021, and $9.5 billion in Q4 2020.”
Overall, domestic dividends gained $69.8 billion in 2021 following a drop of $40.8 billion in the prior year. With expectations in place for more payout growth this year, the WisdomTree Global Dividend Model Portfolio is a valid consideration for advisors.
“This model portfolio seeks to provide capital appreciation and high current income by investing in a globally diversified set of dividend and yield-oriented equity ETFs. The model strives to deliver current yield in excess of a global benchmark of equities,” notes WisdomTree.
The model portfolio is home to nine exchange traded funds, including five addressing international markets, but 60% of the model portfolio’s weight is directed to its four domestic equity holdings. For advisors and clients, that’s relevant because there’s ample runway for S&P 500 member firms to continue boosting payouts this year.
“Within the S&P 500, companies still appear cautious of increases, as they paid out the lowest percentage of quarterly earnings in over a decade, but still set a dividend payment record in Q4 and 2021,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. “While COVID continues to dominate the headlines, the market continues to post significant gains, which has reduced yields. Based on the historical dividend increase rate and current indicated dividend rates, 2022 is on track to set another record in 2022, with COVID determining the increase amount.”
The Global Dividend Model Portfolio’s domestic holdings include the WisdomTree U.S. Total Dividend Fund (DTD) and the WisdomTree US Quality Dividend Growth Fund (DGRW) — both of which employ unique methodologies to unearth quality sources of reliable equity income with long-term payout growth potential.
DTD and DGRW returned 26.2% and 24.5%, respectively, last year, including dividends paid, according to ETFReplay data. Both WisdomTree ETFs were also less volatile than the S&P 500 on an annualized basis in 2021.
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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.