Have clients nearing retirement? Near retirement yourself? Perhaps, instead, uncertainty is driving a portfolio refresh. There are many good reasons to add income to portfolios as market uncertainty rises. Myriad factors are presenting headwinds for investors, presenting a bumpy road ahead. That can derail that stability many investors look for nearing the end of their working days, yet there often remains a need for continued growth through exposure to stocks. Given that, it may be worth considering how an active equity ETF with a focus on dividend income can help.
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An active ETF like TEQI, for example, could present a combination of equity exposure and current income that appeals. The T. Rowe Price Equity Income ETF (TEQI ) charges a 54 basis point fee to invest in large-cap firms poised for outperformance. Specifically, the strategy actively invests in firms that are undervalued based on some key metrics. Those include having a low price-to-earnings (P/E) ratio, above-average dividend yield, and low stock price relative to fundamentals.
That approach has helped TEQI return 13.1% over the last year, per T. Rowe Price data as of December 31. Since inception, the active income ETF has beaten its benchmark, returning an annualized average of 14.3% in that time. The fund’s benchmark, the Russell 1000 Value Index, trailed that return by 1%, per T. Rowe Price data.
Looking to the income side, the fund’s last reported dividend from net income in U.S. dollars sat at $0.1982, according to T. Rowe Price. YCharts data adds that the fund currently offers a 1.79% dividend yield. Its price, sitting above both its 50- and 200-day simple moving averages, indicates a healthy degree of momentum.
Altogether, the fund could provide a notable option for a mix of stock exposure and current dividend income. Whether nearing retirement or just looking to add some ballast to portfolios, TEQI could prove a worthwhile addition as a more conservative approach to equity investing at the core or satellite of a portfolio.
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