When market and economic uncertainty strikes, dividend strategies become a popular choice amongst advisors and investors. Investors now enjoy a wide array of choices when it comes to investing in dividend-paying companies via ETF. The actively managed T. Rowe Price Dividend Growth ETF (TDVG ) and the T. Rowe Price Equity Income ETF (TEQI ) could provide opportunity in the turbulent tides of 2025.
Known for their defensive qualities, including dividend strategies may help bring added stability to portfolios. Dividend-paying companies often provide a source of reliable income across market cycles. While these companies generally don’t generate flashier growth characteristics, they often offer relatively stable performance even in periods of turmoil and drawdown. What’s more, dividends stocks generally exhibit reduced volatility when drawdowns strike. It’s this defensive quality that makes them popular during periods of market stress and strife.
Advisors and investors have a number of options when it comes to dividend funds. However, choosing an actively managed ETF may prove beneficial in today’s tumultuous markets.
The +T. Rowe Price Dividend Growth ETF+ (TDVG ) seeks long-term capital growth and dividend income. The actively managed strategy invests in large-cap dividend-paying companies, or those expected to begin paying dividends. The companies invested in are expected to demonstrate elevated dividend and earnings growth.
The management team seeks to maximize return potential by investing in dividend-paying companies when they are undervalued in markets. When selecting stocks for inclusion, the strategy considers a company’s cash flow, balance sheet strength, and dividend yields that are competitive to peers. It also seeks those companies with competitive advantages within their industry. The fund carries an expense ratio of 0.50%.
The T. Rowe Price Equity Income ETF (TEQI ) combines dividend and value investing in one actively managed strategy. When selecting companies for inclusion, the portfolio managers seek those with an established history of dividend payments or undervalued companies. The strategy targets companies with above-average dividend yields to the broad equity market. It also includes those with low price-to-earnings ratios compared to broader equities.
TEQI focuses primarily on large-cap companies, though it can invest across the size spectrum. These companies exhibit a strong balance sheet. The strategy will also select some stocks based on reduced current prices compared to fundamentals. The research team for the fund believes the stocks included in the portfolio demonstrate the potential for capital appreciation as well as dividend growth. TEQI carries an expense ratio of 0.54%.
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