(1:30) – What Is The Reason Behind The Recent Underperformance of Dividend Paying Stocks?
(8:15) – Should Investors Continue Buying Dividend Paying Stocks?
(13:50) – ProShares S&P 500 Dividend Aristocrats ETF: NOBL
(18:30) – Can You Find Strong Technology Stocks That Pay Dividends?
(25:00) – What Are The Benefits In Investing Into Option Based Income ETFs?
(23:45) – Episode Roundup: REGL, VIG, DRGO, TDV, TDIV, ISPY, IQQQ
In this episode of ETF Spotlight, I speak with Kieran Kirwan, Director, Investment Strategy at ProShares about dividend growth and high-income strategies.
Dividend-paying stocks have been out of favor lately. Most investors have piled into growth stocks, particularly mega-cap tech stocks, while dividend payers are traditionally more mature companies in old economy sectors.
Further, with rising interest rates, money market funds and short-term bonds have become more attractive for income-seeking investors.
There are two popular approaches to dividend investing: dividend growth stocks and high dividend stocks. Dividend growers are usually high-quality companies with solid balance sheets and stable cash flows.
Apple (AAPL) , Microsoft (MSFT) and NVIDIA (NVDA) have been paying a dividend for many years, but their yields are rather small. Alphabet (GOOGL) and Meta Platforms (META) recently announced their first-ever dividends.
The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) holds high-quality companies that have grown their dividend for at least 25 consecutive years. The ProShares S&P Technology Dividend Aristocrats ETF (TDV Quick QuoteTDV – Free Report) holds technology companies that have consistently raised their dividends for at least seven years.
The Vanguard Dividend Appreciation ETF (VIG) and the iShares Core Dividend Growth ETF (DGRO) also hold high-quality companies with a history of consistent dividend growth.
Covered-call ETFs that use options strategies to generate exceptionally high yields have been immensely popular over the past couple of years. In addition to high yields, these strategies generally reduce portfolio volatility.
Investors should, however, remember that these strategies work best in sideways markets but underperform in strong bull markets. They do provide some protection when stocks fall.
The ProShares S&P 500 High Income ETF (ISPY) and Nasdaq-100 High Income ETF (IQQQ) invest in daily covered-call options with an aim to improve the trade-off between income and total return.
— Neena Mishra
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Source: Zacks