Companies with a record of raising dividends are more attractive than usual since they issue their dividends cautiously. These dividend payers typically include higher quality companies that are more cautious when raising dividends since they would do so without stretching their balance sheets.
Income-minded investors have also typically gravitated toward these high quality companies as firms that regularly raise dividends also tend to be confident about their ability to continue paying the dividends as the dividend increases are also calculated in line with future growth
“The fund’s value and profitability tilts should continue to influence its performance,” according to Morningstar. “Both of these characteristics have been associated with higher returns over the long term, but they don’t always pay off. For instance, in the United States, value stocks lagged their growth counterparts over the fund’s life, which detracted from its performance. But its profitability tilt gave it a small return boost.”
For more on smart beta ETFs, visit our Smart Beta Channel.