There are myriad dividend exchange traded funds with which investors can use to tap dividend growth. In fact, dividend ETFs have been among the primary drivers of the smart or strategic boom. Investors looking for dividend exchange traded funds with long, real-time track records and unique weighting methodologies have some compelling options to consider, including the WisdomTree Total Dividend Fund (NYSEArca: DTD).
DTD pays a monthly dividend, is a bet on future sources of dividend growth as highlighted by its robust exposure to the financial services and technology sectors. Not only are those of the largest sources of S&P 500 dividend growth over the past several years, those sectors provide a buffer for DTD in the event that interest rates rise.
Additionally, dividend-paying stocks typically outperform those that do not pay over the long haul, with less volatility, due to the compounding effect of dividends on the investment’s overall return.
Over the past 40 years, companies that boost payouts have proven to be less volatile than their counterparts that cut, suspended or did not initiate or raise dividends.
“DTD tracks a proprietary smart-beta index — the WisdomTree Dividend Index — that screens and weights firms by the number of dividends they are projected to pay in the upcoming year. It does this across large- mid- and small-cap stocks in the U.S. Currently, there are more than 873 different stocks in the fund/index,” according to InvestorPlace.