Dividend ETFs are highly attractive in the current environment, offering investors generous yields and resiliency amid inflation and periods of rising rates.
Dividend increases continue to accelerate, as net gains for the first quarter would have set a new record if not for AT&T’s $6.9 billion reduction as part of its WarnerMedia spinoff, according to Howard Silverblatt, senior index analyst, S&P Dow Jones Indices.
“With Q4 2021 earnings and sales setting record highs and cash flows strong, I expect this trend to continue even as interest rates rise,” Silverblatt wrote last month in a statement. “Both dividends and buybacks are expected to post a record 2022 payment.”
Moving into the second quarter, dividend and low-volatility strategies outperformed in April, signaling the market’s risk-off sentiment, according to S&P Dow Jones Indices.
A similar sentiment was observed in Asia, as defensive equity factors shone in the region last month, with dividend strategies outperforming their parent benchmarks in a “risk-off” month for markets, according to S&P Dow Jones Indices.
Dividend ETFs offer income and capital appreciation, and are generally viewed as safer than other investments.
The companies paying dividends are often mature firms — though some can be quite small — that have mastered their business, made the essential investments, and now generate more money than they have a meaningful use for, giving investors a sense of confidence in their ability to be resilient amid an inflationary and rising rate period.
DIVS invests globally in high-quality dividend growers with a long history of persistently high return on capital.
Investors can gain exposure to the growth in the Asia Pacific economy with the SmartETFs Asia Pacific Dividend Builder ETF (ADIV), which offers exposure to high-quality companies domiciled in China, Taiwan, Hong Kong, Australia, Singapore, the U.S., South Korea, Thailand, Malaysia, and India, according to ETF Database.
For more news, information, and strategy, visit the Dividend Channel.