U.S. Markets closed

Dividend Growth ETFs to Benefit as Middle-East Conflict Rises

Sweta Jaiswal, FRM

Putting an end to the 2019 year-end rally and optimism surrounding the Sino-US phase-one trade deal, intensifying Middle-East tensions have taken centerstage. On Jan 3, the top Iranian commander Qasem Soleimani was killed in an airstrike at Baghdad’s international airport, following direct orders from President Donald Trump. Top Iraqi paramilitary commander Abu Mahdi al-Mohandes was also killed on the way to the airport. The air strike followed the siege of the U.S. Embassy compound in Baghdad after which the United States deployed about 750 U.S. soldiers in the Middle East.

The Middle-East tensions are expected to escalate as a retaliatory move is apprehended from Iran. Moreover, Iran has announced plans of not following the limits on its enrichment of uranium  by pulling back from the 2015 nuclear deal. Iraq has asked American and other foreign troops to leave the country as well. However, in response, the United States has warned the imposition of more sanctions on Iraq. Trump has also announced that the United States has shortlisted 52 Iranian sites it would target in case of a retaliation (read: Country ETFs to Top/Flop on US Air Raid at Baghdad).

Dividend Growth ETFs to Sail Smooth

The appeal for dividend ETFs has been rising among investors. This is especially true given waning yields, easing monetary policy on the global front and market uncertainty triggered by geopolitical worries and deceleration in global growth concerns. This is because dividend-paying securities are major sources of consistent income for investors when returns from equity markets are uncertain.

Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ could be the smartest way to deal with the current market turmoil. Here are a few ETFs to consider:

Vanguard Dividend Appreciation ETF VIG

This is the largest and most popular ETF in the dividend space with AUM of $42.17 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks with a record of raising dividends every year. It holds 182 securities in the basket and charges 6 basis points (bps) in annual fees. VIG has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 5 ETFs to Profit From Rise in Middle East Tension).

ProShares S&P 500 Aristocrats ETF NOBL

This product provides exposure to high-quality companies that have not just paid dividends but have hiked the same for at least 25 consecutive years with most doing so for 40 years or more. It follows the S&P 500 Dividend Aristocrats Index, holding 57 securities in its basket. NOBL has amassed $6.53 billion in its asset base. It has an expense ratio of 0.35% and a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Fearing a Replay of December 2018? ETF Strategies to Try).

iShares Core Dividend Growth ETF DGRO

This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. Holding 477 stocks in its basket, the fund has AUM of $10.37 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2 (Buy) with a Medium risk outlook (read: Dividend Growth ETFs for Long Term Investors).

First Trust NASDAQ Rising Dividend Achievers ETF RDVY

This fund lends exposure to a diversified portfolio of 51 companies with a stellar dividend payout history. It tracks the NASDAQ US Rising Dividend Achievers Index, charging investors 50 bps in annual fees. The ETF has accumulated $1.19 billion in its asset base. It has a Zacks ETF Rank of 2 with a Medium risk outlook (read: A Spread of Top Dividend Growth ETFs for Your Portfolio).

Invesco Dividend Achievers ETF PFM

With $322.3 million, this fund offers exposure to 258 companies that have raised dividends for 10 or more straight fiscal years. It has expense ratio of 0.54%. PFM is a Zacks #3 Ranked ETF with a Medium risk outlook.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
iShares Core Dividend Growth ETF (DGRO): ETF Research Reports
 
ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports
 
Invesco Dividend Achievers ETF (PFM): ETF Research Reports
 
Vanguard Dividend Appreciation ETF (VIG): ETF Research Reports
 
First Trust Rising Dividend Achievers ETF (RDVY): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report