|Expense Ratio (net)||0.16%|
|Category||Allocation--30% to 50% Equity|
|Last Cap Gain||0.00|
|Morningstar Risk Rating||Below Average|
|Beta (3Y Monthly)||0.59|
|5y Average Return||N/A|
|Average for Category||N/A|
|Inception Date||May 14, 2001|
The ability to pay a dividend is also an indication of a company's financial strength and quality: Dividend payers have higher financial health grades, per Morningstar, than non-dividend-payers, and they're also more likely to have moats. There are a two key types of dividend-paying companies, which Morningstar director of global exchange-traded fund research Ben Johnson has helpfully called "growers" and "yielders." In turn, you can sort funds based on which types of companies they tend to emphasize. Growers have shown a tendency to increase their dividends over the years, which helps them deliver a pleasing balance between growing their businesses and paying income to shareholders.
Finally, while I've often argued that retirees shouldn't prioritize income production because it can lead them into risky territory, I do think yielders can work well as part of the Bucket approach. As a retiree spends from Bucket 1 (cash for ongoing living expenses), he or she can refill it, at least partially, with current income distributions. The good news for yield-seekers is that my baseline Bucket portfolios--both those composed of mutual funds and ETFs--have seen their yields tick up since I last shone the spotlight on their income production in September 2017.
Indeed, the Federal Reserve's interest-rate hikes--two in 2018's first half with two more likely on the way before the year is over--are the primary explanation for performance in my bucket retirement portfolios so far this year. Despite decent, albeit unspectacular, returns in the portfolios' equity holdings, those gainers were offset by more rate-sensitive bond positions. Before we delve into the Bucket portfolios' performance, let's first review what the Bucket approach is designed to do.