Need Quality Dividend Exposure at a Low Cost? | ETF Trends

Getting quality dividends that can offer a higher yield than the current benchmark 10-year Treasury note need not be an expensive affair with the Global X S&P 500 Quality Dividend ETF (QDIV), which comes in at a low 0.20% expense ratio.

Investors might be able to simply pick individual dividend-paying stocks, but it’s not that simple.

“But it’s not as easy as picking any old dividend payer,” a Barron’s article said. “Chris Senyek, chief investment strategist at Wolfe Research, says that dividend investors need to be nimble and consider different strategies, depending in part on their time horizon.”

QDIV offers quality exposure in the dynamic wrapper of an ETF that allows investors to hold the fund for the long-term or trade it in the short-term. It beats having to pore over individual stocks in order to find the highest quality dividends.

The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P 500® Quality High Dividend Index. The fund invests at least 80% of its total assets in the securities of the underlying index.

The underlying index is designed to provide exposure to U.S. equity securities included in the S&P 500® Index that exhibit high quality and dividend yield characteristics, as determined by Standard & Poor’s Financial Services LLC, the provider of the underlying index.

QDIV gives investors:

  1. A Quality Focus: QDIV invests in companies that score in the top 200 of the S&P 500 based on a variety of quality metrics including return-on-equity, accruals, and financial leverage.
  2. High Income Potential: To qualify for QDIV, a company must score in the top 200 of the S&P 500 in dividend yield.
  3. Monthly Distributions: QDIV makes distributions on a monthly basis.

QDIV Chart

A Hedge Against Inflation

Getting a higher yield means investors can also hedge against inflation with QDIV. It’s one topic that has wracked the markets with volatility as the prospect of inflation and rising rates gets closer to reality.

“Amid widespread talk of surging inflation—including the Federal Reserve’s acknowledgment this past week that it is running hotter than anticipated—dividend stocks can offer a good hedge against rising prices,” the Barron’s article said. “That’s because with the pandemic getting under control in the U.S and elsewhere, many companies can raise their dividends annually faster than the rate of inflation.”

For more news and information, visit the Thematic Investing Channel.