Are you looking to add some more dividend-related exposure to your portfolio? Dividends not only offer a strong indicator of which firms might be healthier than others, but they also offer current income, as well. A slowing but stubbornly steady economy will present continued complications for investors. An active equity income ETF like TEQI could be particularly intriguing in that environment.
With the recent jobs numbers coming in slightly above expectations and unemployment holding at 3.7%, the economy continues to resist the rate cut storyline. While it remains probable that the Fed will cut rates somewhat at “some” point in 2024, it requires sufficient evidence of a slowdown. Amid that uncertainty, then, it may be worth combining active’s adaptability and an income focus. Whether for political and economic risk or to take advantage of a big positive swing, it can appeal.
The T. Rowe Price Equity Income ETF (TEQI ) combines those approaches in the ETF wrapper. The strategy charges a 54 basis point (bps) fee for its active approach, recently hitting its three-year ETF milestone.
Specifically, TEQI invests in U.S. large-cap companies identified through fundamental analysis and research. Its management team seeks out firms with low price/earnings ratios relative to the broader market, as well as above-average dividend yield and low stock prices relative to fundamentals.
Active Equity Income ETF TEQI's Track Record
That approach has helped TEQI deliver average annualized returns of 10.21% over the last three years and 14.65% since inception through year-end. In both time frames, the active equity income ETF has outperformed its ETF Database Category and Factset Segment averages. That’s led TEQI to hold firms like Wells Fargo & Company (WFC) among its highest-weighted holdings, looking out for solid dividend payers for an uncertain 2024 outlook.
Conservative dividend paying value-leaning equities may have lagged the growth names in 2023 but may prove their worth this year. Following actives’ big year in 2023, then, TEQI could be one solid option to watch as a place to move cash from the sidelines in the first months of 2024.
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