Are dividends being overlooked? It’s possible, as rate cuts have driven investor excitement higher and tech remains overweighted. Dividends offer more than just current income. Crucially, they offer information, with quality dividend investing a powerful tool therein. Dividends can tell quite a lot about a firm’s internal outlook, providing a market signal for savvy investors — and ETFs. Indeed, the right ETF can parse that information to provide intriguing upside.
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The ALPS O’Shares U.S. Quality Dividend ETF (OUSA ) charges 48 basis points (bps) for its quality dividend investing services. The strategy tracks the O’Shares U.S. Quality Dividend Index. In doing so, it weights large-cap U.S. stocks based on high quality, low volatility, high dividend yield, and dividend quality. In a U.S. investing environment beset by concentration risk, that can help investors diversify into underrated firms. The quality dividend investing ETF applies a 5% cap on individual securities and a 22% cap on sectors weights. That can help limit dividends’ tendency to get overexposed to more defensive sectors.
Quality Dividend Investing to End the Year
The fund has returned 18.7% YTD, a healthy return that also outdid its benchmark. Over one year, it’s offered an appealing 30.9% return, as well, beating its benchmark by more than 100 bps.
Given rate cuts in the rearview with potential rate cuts early next year, firms offering quality dividends could take advantage. Firms with healthy dividends tend to have a healthy outlook. That could make a quality dividend ETF an intriguing, alternative view into the market.
With tech overweight for many investors, OUSA could provide a different look at the broader market. The fund’s price remains above both its 200 and 50-day simple moving averages (SMAs) as well, offering continuing momentum per YCharts. Keep an eye on the quality dividend investing ETF as an option whether the market regime shifts or not.
VettaFi LLC (“VettaFi”) is the index provider for OUSA, for which it receives an index licensing fee. However, OUSA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSA.
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