Navigate Uncharted Waters With DIVS
Investors are continuing to bet on dividend stocks as cash looks more attractive in the current environment, defined by decades-high inflation and rising rates, than companies’ future earnings.
Since the start of 2020, companies that pay high levels of dividends have continued outperforming those with lower payouts, while shares of companies putting the most money into stock repurchases have lagged behind those with the lowest buybacks, the Wall Street Journal reported.
According to the Wall Street Journal, the shift shows the premium that investors are paying for steady cash payouts rather than the promise of future profits. That preference has only intensified as the Fed has embarked on an ambitious campaign to raise interest rates to rein in inflation.
So far in 2022, DIVS has had dividend updates from 17 of its 35 holdings, and despite the challenging current economic climate, zero companies have announced dividend cuts or cancellations, according to SmartETFs.
Fifteen companies have announced increases for their 2022 dividends from 2021, and two companies have announced flat dividends compared to 2021, according to SmartETFs. This dividend growth elaborates on past momentum, having seen zero cancellations in 2021 and 2020.
DIVS is actively managed and generally holds approximately 35 equally weighted positions.
The fund looks for companies that meet the following criteria: those that have achieved a real cash flow on investment of at least 10% on capital for each of the last 10 years; companies that have low levels of debt; and value, seeking to purchase shares at a time when target companies are trading at the low end of their peers, low end of their history, and low end of their industry, according to the firm’s website.
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