Dependability and durability are hard to come by in financial markets this year, but dividend-paying stocks are, at the very least, proving less bad than broader benchmarks this year.
High-dividend companies, or those firms with noticeably above-average dividend yields, and the related exchange traded funds are delivering the goods in terms of income and performance. In many cases, high-payout ETFs aren’t just beating the S&P 500, they’re doing so by jaw-dropping margins.
However, that doesn’t mean that investors should gloss over quality dividend growth funds, such as the SmartETFs Dividend Builder ETF (DIVS). In fact, payouts continue growing, underscoring potential potency with a fund like DIVS.
“For the 12-month period ending June 2022, the net dividend rate increased $74.8 billion, compared to net $38.1 billion in the 12-month period ending June 2021. Increases were $89.8 billion versus $58.1 billion, and decreases were $15.1 billion compared to $20.0 billion in the same period in 2021,” according to S&P Dow Jones Indices.
Those data points reference the domestic dividend scenario. For its part, DIVS is a global ETF that allocates 53% of its weight to U.S. equities. However, the U.K. and Switzerland -- two of the steadiest dividend growth markets in Europe -- combine for a quarter of the fund’s weight.
Additionally, DIVS is actively managed, which is a rarity among dividend ETFs. That implies the fund’s managers can adjust geographic and sector exposures as they see fit to capitalize on new opportunities.
"Dividend increases continue to accelerate despite the market retreat from its January 3, 2022 opening high, and we expect Q3 dividends to set another quarterly dividend payment record," said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "The risk-reward tradeoff has significantly changed so far in 2022, as the market turmoil has moved risk- and growth-oriented investors to more secure, less volatile equity dividend producers, as the dividend acts like an anchor, slowing the decline.”
In the June quarter, S&P 500 dividends jumped 14.1% on a year-over-year basis. Not to be left out of the conversation, buybacks also notched another record. That’s relevant when discussing DIVS because as an ETF with overt quality traits, some of its holdings are dividend-payers and devoted buyers of their own stock.
“On a per share basis, S&P 500 Q2 2022 dividend payments set a record, increasing 2.3% to $16.63 from Q1 2022's $16.25, up 14.1% from Q2 2021 $14.58 payment. On an aggregate basis, index components paid a record $140.6 billion in dividends in the quarter, up from $137.6 billion in Q1 2022 and up from $123.4 billion in Q2 2021,” concluded S&P.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.