ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Dividend Channel
  2. DIVS Has the Recipe for Dividend Success
Dividend Channel
Share

DIVS Has the Recipe for Dividend Success

Tom LydonDec 27, 2021
2021-12-27

With global dividends rebounding significantly in 2021 and with that trend expected to continue next year, many advisors and investors are revisiting dividend exchange traded funds.

However, it’s vital to remember that this category is home to an array of funds that sound alike, but in reality are quite different from each other. Finding standouts in the group is difficult, but by focusing on some key metrics, investors can unearth compelling ideas, including the SmartETFs Dividend Builder ETF (DIVS C+).

“Changes to dividend payments don’t occur in a vacuum. Stocks with rising dividends are often backed by financially stable companies with strong sales and profit growth that support those higher cash distributions,” says Morningstar analyst Daniel Sotiroff. “These profitable firms often trade at higher prices relative to their fundamentals, including dividends, and rarely if ever land in the higher-yielding segment of the market.”

Actively managed, DIVS eschews emphasizing yielding. Indeed, in today’s low interest rate environment, high-dividend stocks are seductive to many income-starved investors. However, it’s often companies with the highest dividend yields that are dividend offenders. There are good reasons to avoid the highest of the high yields, and DIVS does just that.

“Dividend-payers with falling prices are more likely to find their way into high-yield portfolios. But it’s important to realize that share prices often fall for a reason: typically when a company’s outlook becomes less rosy,” adds Sotiroff.

A primary benefit of DIVS is that it limits risk. In theory, simply embracing dividend equities should accomplish that goal. After all, dividend stocks are historically less volatile than their non-dividend counterparts. However, there is some risk with high-yield equities. Fortunately, DIVS avoids that by emphasizing quality and durability, among other factors.

“While these risks cannot be completely avoided, well-constructed dividend-income funds take steps to control their exposure to these perils and occupy a reasonable middle ground between yield and limiting risk,” notes Sotiroff.

Bottom line: Dividend investors want the odds on their side — short odds payouts will rise and long odds dividends will be cut or suspended. DIVS checks those boxes.

“Digging into dividend-income strategies may not always be straightforward. In some instances, strategies may take measures to control risk that look great on paper but don’t live up to their billing,” concludes Sotiroff.

For more news, information, and strategy, visit the Dividend Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X