Newer Dividend ETF Strategies Look Promising
Among the recent batch of alternative index-based exchange traded funds to hit the market, some new dividend ETF options have been outperforming prominent, go-to investment choices.
According to S&P Capital IQ, the Deep Value ETF (DVP) , First Trust NASDAQ Rising Dividend Achievers ETF (RDVY) and FlexShares Quality Dividend Index Fund (QDF) have been outperforming their older, larger competitors this year, reports Amey Stone for Barron’s.
Year-to-date, DVP rose 1.4%, RDVY gained 0.4% and QDF was 0.1% higher.
In contrast, some of the largest dividend ETFs, like the Vanguard Dividend Appreciation ETF (VIG) and the iShares Select Dividend ETF (DVY) , have posted negative returns so far this year and underperformed the S&P 500.
DVP, which started trading back in September, tracks the TWM Deep Value Index, an advanced beta strategy created by Tiedemann Wealth Management that tries to provide concentrated exposure to attractively valued dividend-paying companies from the S&P 500 with positive earnings, strong free cash flows and solid balance sheets. DVP shows a 2.16% 30-day SEC yield. [Don’t Forget These Dividend ETFs]
RDVY, which began trading in January follows the NASDAQ Rising Dividend Achievers Index. It selects companies that have track records of boosting their payouts. To be included in the NASDAQ Rising Dividend Achievers Index, companies must have paid a dividend in the trailing twelve-month period greater than the dividend paid in the trailing twelve-month period three and five years prior. The underlying index has a 1.92% yield. [An ETF for Tech Dividend Growth]
QDF, which began trading in December 2012, focuses on quality and dividends. The fund emphasizes the quality factor, of which a company’s ability to generate free cash and dividend growth and stability are integral tenants. QDF tries to reflect the performance of the Northern Trust Quality Dividend Index, which holds high-quality income-oriented U.S. companies with a targeted overall beta similar to the Northern Trust 1250 Index. QDF’s quality emphasis implies a safer payout and more room for potential dividend growth. The ETF has a 2.7% 12-month yield. [Quality Factor Working for This Dividend ETF]
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.
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.
