ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • 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
  • Research
    • 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 of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Volatility Resource Channel
  2. With Equity Income Still Salient, Unearth UDIV
Volatility Resource Channel
Share

With Equity Income Still Salient, Unearth UDIV

Tom LydonOct 28, 2022
2022-10-28

In terms of what’s working among equities this year, the pickings are slim, but dividends stocks and exchange traded funds are, at the very least, performing less poorly than the broader market. Add to that, many dividend-payers are displaying less volatility than broader benchmarks, confirming there’s plenty of utility with this asset class. That could be a sign that an ETF such as the Franklin U.S. Core Dividend Tilt Index ETF (UDIV A) is an appropriate consideration for this environment and beyond.

Focusing on the long term, which is relevant when it comes to dividend investing, UDIV is a pertinent idea for a broad swath of investors because it allows market participants to effectively reinvest dividends while removing the need to select individual dividend growth stocks.

“Dividends, when reinvested, can significantly boost total returns over time, making dividend-paying stocks an attractive option for older and younger investors alike,” according to Charles Schwab research. “For example, if you invested $1,000 in a hypothetical investment that tracked the S&P 500® Index on January 1, 1990, but didn’t reinvest the dividends, your investment would have been worth $11,687 as of September 2022. If you had reinvested the dividends, you would have ended up with just over $20,000—nearly double.”

Of course, dividend growth is the lubricant of the engine of dividend reinvesting, and UDIV is more than adequately levered to the theme of payout growth. UDIV, which follows the Morningstar US Dividend Enhanced Select Index, holds 319 stocks. Of that group, more than 43% hail from either the technology and healthcare sectors — two of the best sources of S&P 500 payout growth over the past decade.

Those sector exposures also underscore UDIV’s quality purview. Quality is imperative when assessing dividend stocks because traits such as balance sheet strength, credit quality and management commitment are windows into a firm’s ability to sustain and grow payouts.

Dividend growth is beneficial to investors for other reasons. Those include volatility reducing properties and the potential for long-term outperformance.

“Generally speaking, you want to find companies that not only pay steady dividends but also increase them at regular intervals—say, once per year over the past three, five, or even 10 years. Indeed, companies that grow their dividends tend to outperform their peers over time,” added Schwab. “Over the past 40 years, stocks that maintained or grew their dividends outperformed those that cut their payouts or offered none at all.”

For more news, information, and strategy, visit the Volatility Resource Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

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