It’s fair to say that dividend investing hasn’t done as well as many would have liked in 2023. The S&P 500 High Dividend index has seen a negative return YTD, for example. However, that doesn’t mean that dividend investing has lost its fundamental appeal. Indeed, should dividends rebound in 2024, and they well could given the overall outlook, a dividend ETF like SDOG could appeal.
What would a dividend bounce-back scenario look like next year? While inflation is cooling and higher rates seem to be setting up a soft landing, that doesn’t mean the economy will see strong acceleration or momentum. Even tepid growth would provide an opportunity for dividend-paying stocks to show their quality.
How an ETF Like SDOG Can Play a Dividend Rebound
Dividend-paying stocks don’t just offer current income, of course, which does boost an overall portfolio and allow reinvestment of that income. They also traditionally offer dividends from a position of strength. As such, dividends help indicate to investors which firms may be healthiest and therein potentially a strong option in a slowing economy.
The ALPS Sector Dividend Dogs ETF (SDOG ) offers a particularly appealing way to get dividend exposure. The fund tracks the S-Network Sector Dividend Dogs Index, which brings an equal-weight approach to the “Dogs of the Dow” approach. As such, that prevents it from overweighting toward more staid areas like utilities or financials. At the same time, it emphasizes healthy dividend payers in important sectors like tech.
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That approach has helped the dividend ETF return 8.7% over the last month, outperforming its ETF Database Category and FactSet Segment averages. The strategy charges a 36 basis point (bps) fee for the approach. It may appeal to those looking for a strategy to benefit from a potentially better year for dividends in 2024.
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