“Based on their current payout policies, S&P 500 2019 dividends already have a 3.5-percent tailwind built in, setting the stage for potentially another record year, with the increase again expected to outpace wage growth and inflation,” said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

Related: Demand for Smart Beta ETF Strategies Continues to Grow

Companies that have consistently increased dividends tend to be high in quality and show a strong potential for growth. These dividend growers have been able to withstand periods of market duress, exhibiting smaller drawdowns as investors sold off riskier assets, while still delivering strong returns on the upside, to generate improved risk-adjusted returns over the long haul.

“Second, the fund offers a high, but realistic, dividend yield. Vanguard High Dividend Yield ETF has an SEC yield of about 3.2%, which is 1.2 percentage points higher than you’d earn holding a similarly low-cost S&P 500 fund. It’s enough to make a difference in the income you earn from your portfolio, but it’s not so high that it’s a giant red flag, either,” according to Motley Fool.

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