Plenty of dividend exchange traded funds are delivering for investors this year. The same goes for low volatility ETFs, so it stands to reason that by combining dividends and low volatility under the umbrella of one ETF that that strategy would payoff.
Up 14.4% year-to-date, the PowerShares S&P 500 High Dividend Portfolio (NYSEArca: SPHD ) confirms the combination of dividends and low volatility pays, well, dividends. SPHD "is composed of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility," according to PowerShares.
While SPHD lacks an official dividend growth screen, it is worth noting that several members of the ETF's 50-stock lineup, including AT&T ( T ) and Sysco ( SYY ), are also members of the S&P Yield Dividend Aristocrats Index, which mandates 25 years of dividend hikes for entry.
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Said another way, SPHD is not a dedicated dividend growth ETF but many of its holdings have lengthy track records of consistent payout growth and that is a good thing for investors. Dividend growth as a means of trumping inflation could and arguably should serve to highlight the advantages of the ETFs that focus on dividend growth stocks. That group is comprised of well-established ETFs that emphasize dividend increase streaks as well as a new breed of funds that look for sectors chock full of stocks that have the potential to be future sources of dividend growth.
"As far as market capitalization allocations, the fund is value weighted with large-cap values stocks accounting for 36.21%; mid-cap value stocks, 29.38% and touch of small-cap value stocks at 1.44%; value accounts for just over 67% of the fund. The next largest market cap allocation, at 28.57%, is in mixed value-growth companies and the least allocation is 4.41% of large-cap growth," according to Seeking Alpha analysis of SPHD.
Dividend growers provide an aspect of quality and growth since these firms have a long track record of raising dividends. Companies that have consistently raised dividends also exhibit stable balance sheets and consistent earnings growth.
For more news and strategy on the Dividend ETF market, visit ourDividends category.
PowerShares S&P 500 High Dividend Portfolio
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
This article was provided by our partner Tom Lydon of etftrends.com.