Dividend ETFs occupy a significant footprint in the smart beta space. Some new entrants are giving investors unique ways of boosting portfolio income, including the VictoryShares Dividend Accelerator ETF (NASDAQ: VSDA).
The VictoryShares Dividend Accelerator ETF debuted in April and follows the Nasdaq Victory Dividend Accelerator Index (NQVDIV), which Victory Capital developed in partnership with Nasdaq. What makes VSDA unique is that it focuses on more than a company’s previous dividend track record.
While lengthy histories of boosting payouts are attractive, investors should also want to capture future sources of robust dividend growth. After all, dividend increase streaks are backward-looking and are not guarantee’s of future payout growth.
“The VictoryShares Dividend Accelerator ETF offers exposure to large-cap U.S. stocks, that feature not only a history of increasing dividends, but which also possess the highest probability of future dividend growth. It seeks to provide exposure to dividend growth, rather than yielding, offering a potential diversification benefit to high dividend yielding alternatives, particularly in a rising rate environment,” according to VictoryShares.
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.