Dividend Stocks, ETFs Remain in Style

ETF Trends

Dividend increases among U.S. companies rose $12.6 billion in the April through June time frame, but that lags the $17.6 billion growth rate seen in the first quarter, according to S&P Dow Jones Indices.

According to S&P Dow Jones Indices, 696 dividend increases were reported during the second quarter of this year compared to the 591 increases which were reported during the second quarter of last year. For the first half of 2014, 1,774 issues increased their payments, up 15.6% from the 1,535 issues that increased their payments during the first half of 2013.

Those statistics fortify the notion that dividend stocks and the exchange traded funds that hold them remain favored by investors.

“Mutual funds focused on some of these yield-oriented sectors have attracted greater interest from investors this year. In 2014 through May, utility and energy limited-partnership-focused funds in the U.S. brought in $6.08 billion in new investor cash, up from $4.21 billion in the year-earlier period, according to fund tracker Morningstar, reports Matt Jarzemsky for the Wall Street Journal.

After a lethargic start to 2014, dividend stocks and ETFs resumed out-performance of the S&P 500 in late February, about the same time that momentum offerings, such as biotechnology and Internet names, fell out of favor. [Dividend ETFs Resume Out-Performance of S&P 500]

The S&P 500 entered Tuesday with a 2014 gain of 8%, but the benchmark U.S. index has been topped by several high-yield dividend ETFs. Year-to-date, the iShares Select Dividend ETF (DVY) has slightly outpaced the S&P 500 while the PowerShares S&P 500 High Dividend Portfolio (SPHD) has surged nearly 12%.

The out-performance of DVY, SPHD and other high-yield payout ETFs has been attributed to the weight of those funds to the utilities sector, which is the best performer in the S&P 500 this year. DVY, one of the four largest U.S. dividend ETFs, has a 34.5% to the utilities sector. SPHD’s allocation to utilities is 26.5%. [High Yield Dividend ETFs are Winning Again]

DVY, with a trailing 12-month yield of almost 3%, has added $547.5 million in new assets this year while SPHD has added almost $9 million of its $166.1 million in assets this year. SPHD tracks the S&P 500 Low Volatility High Dividend Index, which is comprised of 50 stocks taken from the S&P 500 that have historically exhibited high dividend yields and low volatility.

“Mutual funds focused on some of these yield-oriented sectors have attracted greater interest from investors this year. In 2014 through May, utility and energy limited-partnership-focused funds in the U.S. brought in $6.08 billion in new investor cash, up from $4.21 billion in the year-earlier period,” the Journal reported, citing Morningstar.

View Comments (0)