It’s difficult to argue against a dividend yield of 7%, but the discerning investors will want to know if it’s sustainable over an extended period of time.
This is where an exchange traded fund (ETF) like the Global X SuperDividend Alternatives ETF (ALTY ) comes into play. As opposed to safe haven debt like Treasury yields, ALTY gives fixed income investors exposure to a variety of sources, such as real estate and business development companies (BDCs).
ALTY seeks to track the price and yield performance of the Indxx SuperDividend® Alternatives Index. The underlying index is comprised of securities that rank among the highest dividend-yielding securities in each eligible category of alternative income investments, at the time of index reconstitution, as defined by the index provider.
As mentioned, one of the key advantages of ALTY is its diversification of income. ALTY invests in four different alternative income segments, including real estate, MLPs and infrastructure, private equity and BDCs, and fixed income and derivative strategies, potentially serving as a portfolio’s entire alternatives allocation.
Highlights of ALTY:
- High income potential: ALTY is designed to target categories that have historically offered high yield potential.
- Monthly distributions: ALTY has made monthly distributions for six years running.
- Alternative Solution: ALTY invests in five distinct income segments, potentially serving as a portfolio’s entire alternatives allocation.
What's Ahead for Dividends in 2022
Getting diversified income with a fund like ALTY is imperative in 2022. With potential market headwinds forthcoming, having that diversity of income with a proven track record is a boon for fixed income investors.
“I think it is quite clear that there are 3 items which are in the forefront of financial news, and those will be the ones to look at: the pandemic, inflation, and the Fed’s taper and potential rate hike,” wrote Robert and Sam Kovacs in Seeking Alpha. “Inflation has happened because of both demand shocks and supply shocks caused by the pandemic and government’s response to it.”
“Now, Jerome Powell has finally realized what we have been saying for over a year: inflation is not transitory. So the Fed has to act to keep inflation in check,” Robert and Sam Kovacs added. “A taper is the first step. But a taper is just the gradual reduction of market stimulating effects. The first implementation of a restrictive monetary policy would be an interest rate hike.”
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