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/Critical Minerals
    • 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. Nasdaq Portfolio Solutions Channel
  2. Surprising Sector ETF With Dividend Growth Potential
Nasdaq Portfolio Solutions Channel
Share

Surprising Sector ETF With Dividend Growth Potential

Tom LydonFeb 14, 2022
2022-02-14

Following some negative dividend action during the coronavirus-induced oil bear market of 2020, investors may not be thinking there are a lot of dividend growth opportunities in the energy patch.

Actually, the opposite is true, and among the various energy sector exchange traded funds, the Invesco DWA Energy Momentum ETF (PXI B) is a surprising avenue with which to access some of the fastest-growing, steadiest dividends in the energy complex.

PXI is a surprise on this front because it follows the Dorsey Wright® Energy Technical Leaders Index, which is a momentum-based index, and investors don’t readily associate momentum strategies with large dividends. Additionally, PXI’s 30-day SEC yield is just 1.06%, according to issuer data. That doesn’t scream “high-dividend,” but it also implies ample room for payout growth.

Amid competition from renewable energy sources and newfound emphasis on reduced capital spending, energy companies are returning more capital to shareholders by way of both buybacks and dividends.

“As a result, the energy sector’s dividends are growing faster than any other part of the U.S. equity market. Since 2018, the average dollar amount of dividends among energy companies has grown by over 50%. That’s up from just 5% growth for the prior three years. And since 2016, energy companies’ dividend amounts are up 80% for the five-year period,” says Morningstar analyst Lauren Solberg.

In recent years, some PXI components, including Diamondback Energy (FANG), EOG Resources (EOG), and Pioneer Natural Resources (PXD), grew payouts at impressive rates.

“Diamondback Energy (FANG) has raised its dividend roughly 370% in the past three years, EOG Resources (EOG) more than 500% and Pioneer Natural Resources (PXD) by more than 2,000%,” adds Solberg.

That trio combines for almost 8% of PXI’s weight. In the case of Pioneer Natural Resources, that company is using a variable dividend. That’s a prudent strategy for energy producers because it means they pay out more to shareholders when oil prices surge and less when those prices decline, indicating that there are benefits compared to fixed dividend payments.

Devon Energy (NYSE:DVN) and ConocoPhillips (NYSE:COP), which combine for 7.65% of PXI’s weight, also pay variable dividends. ConocoPhillips is looking to return $75 billion to investors “in the form of dividends over the next 10 years as long as the price of oil averages $50 per barrel (much lower than the current price of over $90 per barrel),” notes Solberg.

Bottom line: PXI could reward investors thanks to rising oil prices and more dividend growth than previously expected.

For more news, information, and strategy, visit the Nasdaq Investment Intelligence 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