By Jing Pan, B.Sc., MA | March 26, 2017
Best Dividend Aristocrats ETFs
The “dividend aristocrats” are an elite group of dividend-paying stocks. To become a dividend aristocrat, a company must be an S&P 500 component and must have increased its dividend payout every year for at least 25 years. Unsurprisingly, the dividend aristocrats have been income investor favorites. There are also exchange-traded funds (ETFs) that focus on this elite group of dividend stocks. In this article, we are going to take a look at the best dividend aristocrats ETFs for income investors.
Why Should Income Investors Consider Dividend Aristocrats?
On the surface, it seems that the only thing that separates dividend aristocrats from other dividend-paying stocks in the S&P 500 is their dividend history. But since past performance does not guarantee future results, why should income investors give special consideration to dividend aristocrats?
Also Read:10 Highest-Paying Dividend Stocks for 2017
Well, the answer lies in the quality and safety of those companies’ dividends. As income investors, the goal is to have a portfolio that can generate a steady stream of income going forward. The thing is, though, just looking at a company’s current dividend yield doesn’t tell investors that much about what’s going to happen in the future. Things may look fine right now, but when the next recession hits, will the company be able to keep making those dividend payments?
If a company is one of the dividend aristocrats, it means it has not only been making uninterrupted dividend payments, but has also been raising them for at least 25 consecutive years. Our economy went through a few ups and downs over the last quarter of a century, including the Great Recession, which many consider to be the biggest downturn since the Great Depression. So by being a dividend aristocrat, the company shows that it has the ability to keep rewarding income investors even when times are tough.
Also Read:10 Best Dividend-Paying Steel Stocks to Buy in 2017
The ability to raise dividends also shows two important qualities of a company. First, because dividends come from the a company’s bottom line, a solid track record of raising its payout implies that the company must have some sort of competitive advantage to keep generating profits. There have been cases where companies are losing money and use debt to fund their dividend payments. However, borrowing can’t go on forever, and most of those companies don’t have a dividend track record impressive enough to make them dividend aristocrats.
Second, it shows that the company is willing to return value to shareholders in the form of dividends. There are many companies with sizable economic moats, but not all of them are willing to pay a dividend. Some may choose to reinvest their earnings, while others may return value to shareholders through stock buybacks. Dividends are sticky; while there is no guarantee, if a company declares a certain amount of dividend, the implication is that it will keep paying at least this dividend rate going forward. This is because in today’s market, few things disappoint investors more than a dividend cut. Therefore, when a company has been raising its dividend for a quarter of a century, it shows, at the very minimum, that this is a company that’s willing to return value to shareholders through dividends.
Also Read:Best Pharmaceutical Dividend Stocks to Watch in 2017
Why Dividend Aristocrats ETFs?
Now, since dividend aristocrats are so great, why not just invest in these companies?
Well, investing in individual companies in the dividend aristocrats list is certainly a way to go. As a matter of fact, many blue-chip companies on the list are already income investor darlings. Still, there are benefits to using dividend aristocrats ETFs.
Just like any type of ETF, dividend aristocrats ETFs help investors diversify. The current dividend aristocrats list consists of 51 companies. Some of these companies have outperformed the market, while others underperformed. The ETFs that focus on dividend aristocrats typically give investors exposure to companies in a variety of industries. If one company, or even one industry, enters a downturn, it’s likely not going to do too much damage to the performance of the ETF.
Also Read:Best Utilities Stocks with High Dividends for 2017
Of course, an investor can also diversify their income portfolio by themselves. To achieve diversification across and within segments, it would require picking tens, if not hundreds of companies. Choosing individual companies requires time and effort, not to mention the commission paid to the brokerage every time an order is filled. This bring to the second benefit of using dividend aristocrats ETFs: the saving of the time, effort, and commission of picking stocks yourself.
And then there’s the peace of mind offered by owning dividend ETFs. When an investor builds a portfolio of individual stocks, they might get worried if one company in the portfolio had a bad earnings report. With dividend aristocrats ETFs, the rebalancing is done by investing professionals, so investors might not worry too much about company-specific news.
Also Read:Top Defense Stocks to Watch in 2017
In exchange for providing those benefits, ETFs charge a fee. Therefore, when choosing dividend ETFs, it’s important to look at not just its investment goals and components, but also its management expense ratio (MER).
Now, let’s take a look at the five best Dividend Aristocrats ETFs for income investors.
Dividend Aristocrats ETFs List
|ETF Name||Symbol||Dividend Yield||MER|
|ProShares S&P 500 Dividend Aristocrats ETF||NOBL||1.78%||0.35%|
|ProShares S&P MidCap 400 Dividend Aristocrats ETF||REGL||1.11%||0.4%|
|SPDR S&P Dividend ETF||SDY||3.04%||0.35%|
|SPDR S&P Global Dividend ETF||WDIV||3.92%||0.5%|
|Vanguard Dividend Appreciation ETF||VIG||2.02%||0.09%|
1. ProShares S&P 500 Dividend Aristocrats ETF
ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) seeks the investment results of the S&P 500 Dividend Aristocrats Index. It is the only ETF that focuses exclusively on S&P 500 companies that have raised dividends for at least 25 consecutive years. Note that the index has outperformed the S&P 500 with lower volatility since its inception. (Source: “S&P 500 Dividend Aristocrats ETF,” ProShares, last accessed March 23, 2017.)
The S&P 500 Dividend Aristocrats Index is equally weighted, and limits the weight of any single sector to no more than 30% of the index. The index is rebalanced to equal weight each January, April, July, and October, with an annual reconstitution during the January rebalance.
Right now, the NOBL ETF holds 51 companies. Its three largest sectors are consumer staples, industrials, and healthcare. The fund has a management expense ratio of 0.35% and an annual dividend yield of 1.78%.
2. ProShares S&P MidCap 400 Dividend Aristocrats ETF
ProShares S&P MidCap 400 Dividend Aristocrats ETF (BATS:REGL) tracks the performance of the S&P MidCap 400 Dividend Aristocrats Index. It is the only ETF that focuses exclusively on companies in the S&P MidCap 400 Index that have increased their dividends for at least 15 straight years. (Source: “ProShares S&P MidCap 400 Dividend Aristocrats ETF,” ProShares, last accessed March 23, 2017.)
While most blue-chip companies command huge market capitalization, there are mid-cap companies that have solid track records of dividend hikes as well. Moreover, because they are not as established as the large-cap names, some of them could offer more growth potential.
The S&P MidCap 400 Dividend Aristocrats Index is equally weighted, with no single sector contributing to more than 30%. Like the S&P 500 Dividend Aristocrats Index, the mid-cap index is rebalanced four times a year.
The REGL ETF currently holds 44 companies, with the three largest sectors being financials, utilities, and industrials. The ETF has a management expense ratio of 0.4% and an annual dividend yield of 1.11%.
3. SPDR S&P Dividend ETF
SPDR S&P Dividend ETF (NYSEARCA:SDY) seeks to track the performance of the S&P High Yield Dividend Aristocrats Index. The index is designed to measure the performance of companies within the S&P Composite 1500 that have raised dividends every year for at least 20 years. (Source: “SPDR S&P Dividend ETF,” SPDR, last accessed March 23, 2017.)
With an annual yield of 3.04%, SPDR S&P Dividend ETF is a relatively high-paying dividend ETF. The reason is that the index it tracks is weighted by the components’ annual dividend yield. Right now, the ETF holds 110 stocks. Its top three holdings are AT&T Inc. (NYSE:T), AbbVie Inc(NYSE:ABBV), and Realty Income Corp (NYSE:O).
The fund has a management expense ratio of 0.35%.
4. SPDR S&P Global Dividend ETF
SPDR S&P Global Dividend ETF (NYSEARCA:WDIV) seeks to provide the investment return of the S&P Global Dividend Aristocrats Index. The index is designed to measure the performance of the highest-yielding companies within the S&P Global Broad Market Index that have paid increasing or stable dividends for at least 10 straight years.
WDIV is a high-yield dividend ETF, currently yielding 3.92%. This is in part because the index is weighted by indicated annual dividend yield in order to tilt the portfolio towards companies with higher dividend yields. The index also pays attention to dividend sustainability and growth, as it incorporates criteria on dividend payout ratios and maximum dividend yield to exclude companies whose future payouts might not be sustainable.
The fund holds shares of 100 companies, with the largest sectors being financials, utilities, and real estate. The WDIV ETF has an expense ratio of 0.5%.
5. Vanguard Dividend Appreciation ETF
Vanguard Dividend Appreciation ETF (NYSEARCA:VIG) seeks to track the performance of the NASDAQ U.S. Dividend Achievers Select Index. The index consists of a select group of securities with at least 10 consecutive years of dividend hikes. The ETF uses a full replication approach and currently holds 184 stocks. The three largest holdings are Microsoft Corporation (NASDAQ:MSFT), Johnson & Johnson (NYSE:JNJ), and PepsiCo, Inc. (NYSE:PEP). (Source: “Vanguard Dividend Appreciation ETF,” The Vanguard Group Inc, last accessed March 23, 2017.)
VIG ETF has an annual dividend yield of 2.02%. It also has an extremely low expense ratio; at just 0.09%, the ETF’s expense ratio is 91% lower than the average expense ratio of funds with similar holdings.
Final Thoughts on Dividend Aristocrats ETFs
One thing you may have noticed is that dividend aristocrats ETFs are not really the highest-yielding ones in the ETF world. This is because many dividend aristocrats are blue-chip names, and investors are willing to pay a premium for the income safety they provide. Since a company’s dividend yield moves inversely to its price, the popularity of dividend aristocrats means they are not really the highest-yielding stocks on the market.
At the end of the day, keep in mind that the reason of investing in dividend aristocrats is not their yield, but rather the stability, durability, and growth potential of their dividends.
What is the Best dividend aristocrat ETF? ›
Best Dividend ETFs: ProShares S&P 500 Dividend Aristocrats ETF (NOBL) The S&P 500 Dividend Aristocrats Index is one of the most popular places dividend investors turn to for ideas. Each of its holdings has increased dividends for at least 25 consecutive years and is a member of the S&P 500 Index.Which Dividend Aristocrats pays the highest dividend? ›
The complete list of dividend aristocrats.
|O||Realty Income Corp.|
|ED||Consolidated Edison Inc.|
|Vanguard 500 Index Fund||(NYSEMKT:VOO)||$744.8 billion|
|Invesco QQQ Trust||(NASDAQ:QQQ)||$145.9 billion|
|Vanguard Growth Fund||(NYSEMKT:VUG)||$132.3 billion|
|Avantis Small-Cap U.S. Value ETF||(NYSEMKT:AVUV)||$4.72 billion|
- BlackRock Equity Dividend MADVX.
- ClearBridge Dividend Strategy SOPYX. ...
- Columbia Dividend Income LBSAX.
- Fidelity High Dividend ETF FDVV.
- FlexShares Quality Dividend ETF QDF.
- Franklin U.S. Low Volatility High Dividend ETF LVHD.
The SPDR Dividend Aristocrats ETFs source quality yield by focusing on companies with a long, consistent history of paying dividends. Additional filters, such as maximum payout ratio, help to further ensure that the companies in the Dividend Aristocrats are of the highest order.What ETF tracks Dividend Aristocrats? ›
SPDR S&P Global Dividend ETF (WDIV)
The S&P Global Dividend Aristocrats Index provides the benchmark index for the SPDR S&P Global Dividend ETF. This index tracks the 100 stocks with some of the highest dividend yields worldwide—and it's weighted so that no more than 20 stocks are from any single country.
While the most significant difference between these 2 types of stocks is the number of consecutive years of dividend increases they have delivered. Because Aristocrats have paid increasing dividends for at least 25 years in a row. While the King's record of dividend increases is at least 50 years.Is there a Dividend Aristocrats Fund? ›
If you're looking to invest in Dividend Aristocrats through a fund, fund manager Pro Shares has an ETF especially for that, the S&P 500 Dividend Aristocrats ETF (NOBL). Another option is the SPDR S&P Dividend ETF (SDY). Both funds pay dividends quarterly.What dividend pays 100k a year? ›
You'll need to build your portfolio up to at least $1 million to make $100,000 each year through dividend investing. Conservative options trading will give you more capital to invest into more dividend stocks and get you closer to the 6-figure goal.What is the best performing ETF of all time? ›
Top Performing ETFs Of All Time.
|Fund Name||Direxion Daily Technology Bull 3x Shares|
|Return % Since Inception||3,259.93|
What is the most successful ETF? ›
|SLX||VanEck Steel ETF||63.42%|
|XHB||SPDR S&P Homebuilders ETF||63.26%|
|VONG||Vanguard Russell 1000 Growth ETF||62.81%|
|XMMO||Invesco S&P MidCap Momentum ETF||62.53%|
- Vanguard S&P 500 ETF. The Vanguard S&P 500 ETF (VOO -0.17%) is an index fund designed to track the S&P 500 index. ...
- Invesco S&P 500 Equal Weight ETF. ...
- iShares Russell 1000 Growth ETF. ...
- Vanguard Real Estate ETF.
The best place to start if you're looking for the best dividend ETF is the Vanguard Dividend Appreciation ETF (VIG). This is the largest such ETF on Wall Street, with a massive $66 billion in assets under management.What is the best ETF to invest in 2023? ›
- Fidelity ZERO Large Cap Index.
- Vanguard S&P 500 ETF.
- SPDR S&P 500 ETF Trust.
- iShares Core S&P 500 ETF.
- Schwab S&P 500 Index Fund.
- Shelton NASDAQ-100 Index Direct.
- Invesco QQQ Trust ETF.
- Vanguard Russell 2000 ETF.
10-Year Avg. Annual Return. Founded 40 years ago, the Vanguard Wellesley Income Fund is an actively managed mutual fund that's popular among retirees looking for a source of dependable income. Despite being actively managed, the fund charges a low expense ratio of just 16 basis points.What is the best way to invest in Dividend Aristocrats? ›
Dividend Aristocrats are stocks that have paid an increasing dividend every year for at least 25 years. Dividend Aristocrats are different than Dividend Kings. The best way to invest in Dividend Aristocrats is the ProShares S&P 500 Dividend Aristocrats ETF.Which Dividend Aristocrats are undervalued? ›
In addition to the annual dividend increase requirement, Dividend Aristocrats must also have at least a $3 billion float-adjusted market cap and at least $5 million in daily share trading value for three months prior to making the list.Are high dividend ETFs worth it? ›
High dividend ETF's can be an excellent investment option. However, the problem you face i this situation, is that a large portion of your returns will be in the form of dividends. So if they are in a taxable account, you will be paying taxes on those dividends every year.What companies are in Vanguard High dividend yield ETF? ›
- Exxon Mobil Corporation 3.31%
- Johnson & Johnson 2.98%
- JPMorgan Chase & Co. 2.82%
- Chevron Corporation 2.33%
- Procter & Gamble Company 2.33%
- Home Depot, Inc. 2.32%
- Eli Lilly and Company 2.01%
- Merck & Co., Inc. 1.88%
Is Dividend Aristocrats better than sp500 index? ›
The S&P 500 Dividend Aristocrats index has returned an annualized 18.3% over the past 10 years, compared with 17.1% for the S&P 500. These are heady days for dividend lovers.Who are the best dividend investors? ›
Warren Buffett is widely considered the greatest investor of all time, and much of his investment strategy relies on collecting dividend payments.What is better than dividend stocks? ›
Unlike dividend investing, with growth stocks, money remains invested in the company and is not paid out in periodic intervals. Instead, all excess return generated gets reinvested back into the stock itself.
Dividend stocks are vulnerable to rising interest rates. As rates rise, dividends become less attractive compared to the risk-free rate of return offered by government securities.What is the S&P SA Dividend Aristocrats Index? ›
The S&P South Africa Dividend Aristocrats measures the equal weighted performance of companies within the S&P South Africa Composite (the “Index Universe”) that have followed a policy of increasing or maintaining stable dividends for seven consecutive years.Is S&P Global a Dividend Aristocrat? ›
The S&P Global Dividend Aristocrats is designed to measure the performance of the highest dividend yielding companies within the S&P Global Broad Market Index (BMI) that have followed a policy of increasing or stable dividends for at least 10 consecutive years.What is the dividend yield for NOBL ETF? ›
ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
NOBL has a dividend yield of 1.98% and paid $1.74 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Dec 22, 2022.
To make $3000 a month in dividends you need to invest between $1,028,571 and $1,440,000 with an average portfolio of $1,200,000. The exact amount of money you will need to invest to create a $3000 per month dividend income depends on the dividend yield of the stocks.Can you live off dividends of 1 million dollars? ›
Yes. Dividend-paying stocks, just like other stocks and investments, can lose value. Can you live off dividends of 1 million dollars? If your portfolio produced an average dividend yield of 4%, a nest egg of $1 million would generate $40,000 per year in dividend payments.How much money do you need to make $1000 month in dividends? ›
Look for $12,000 Per Year in Dividends
To make $1,000 per month in dividends, it's better to think in annual terms. Companies list their average yield on an annual basis, not based on monthly averages.
Which ETF has the best 10 year return? ›
|TAN||Invesco Solar ETF||21.31%|
|QCLN||First Trust Nasdaq Clean Edge Energy Fund||20.98%|
|VGT||Vanguard Information Technology ETF||18.27%|
|IAI||iShares U.S. Broker-Dealers & Securities Exchanges ETF||18.21%|
|2.||Raj Rayon Inds.||81.20|
|NVDS||AXS 1.25X NVDA Bear Daily ETF||610%|
|BKHY||BNY Mellon High Yield Beta ETF||552%|
|QTJA||Innovator Growth Accelerated Plus ETF - January||540%|
|FSIG||First Trust Limited Duration Investment Grade Corporate ETF||488%|
The largest Vanguard ETF is the Vanguard Total Stock Market ETF VTI with $271.69B in assets. In the last trailing year, the best-performing Vanguard ETF was VDE at 15.92%. The most recent ETF launched in the Vanguard space was the Vanguard Short-Term Tax-Exempt Bond ETF VTES on 03/09/23.What are the top three ETFs? ›
|1||IVV||iShares Core S&P 500 ETF|
|2||VTI||Vanguard Total Stock Market ETF|
|3||VOO||Vanguard S&P 500 ETF|
|4||QQQ||Invesco QQQ Trust Series I|
|Symbol Symbol||ETF Name ETF Name||% In Top 10 % In Top 10|
|QQQ||Invesco QQQ Trust||53.59%|
|VUG||Vanguard Growth ETF||45.97%|
|IWF||iShares Russell 1000 Growth ETF||44.05%|
|VGT||Vanguard Information Technology ETF||59.44%|
For most personal investors, an optimal number of ETFs to hold would be 5 to 10 across asset classes, geographies, and other characteristics. Thereby allowing a certain degree of diversification while keeping things simple.How many ETFs should you invest in at once? ›
Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation. When building a portfolio of ETFs, it is crucial to consider your investment strategy, objectives, and risk tolerance.Is there a Dividend Aristocrats fund? ›
If you're looking to invest in Dividend Aristocrats through a fund, fund manager Pro Shares has an ETF especially for that, the S&P 500 Dividend Aristocrats ETF (NOBL). Another option is the SPDR S&P Dividend ETF (SDY). Both funds pay dividends quarterly.Which is better SCHD or NOBL? ›
NOBL - Sharpe Ratio Comparison. The current SCHD Sharpe Ratio is -0.19, which is lower than the NOBL Sharpe Ratio of -0.07. The chart below compares the 12-month rolling Sharpe Ratio of SCHD and NOBL.
What is the difference between Dividend Aristocrats and dividend kings? ›
The primary difference between the two types of dividend stocks is that Dividend Aristocrats are stocks of companies that have increased their dividends every year for at least 25 years; whereas, Dividend Kings have increased dividends annually for at least 50 years.What stocks have paid dividends for 100 years? ›
What Companies Have Paid Dividends the Longest? Famously, the following companies are among those that have paid shareholders dividends for over 100 years: Coca-Cola, General Mills, Chubb, Colgate-Palmolive, Proctor & Gamble, Consolidated Edison, Eli Lilly, and Exxon Mobile.Should I invest in Dividend Aristocrats? ›
Dividend Aristocrats are generally safe, long-term dividend-paying stocks that should be in any conservative investor's portfolio. Since balancing a portfolio of 65 stocks is more work than most investors want to do, the best way is to buy shares of the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).What is the highest earning ETF? ›
|NANR||SPDR S&P North American Natural Resources ETF||76.51%|
|ITB||iShares U.S. Home Construction ETF||76.49%|
|XSVM||Invesco S&P SmallCap Value with Momentum ETF||76.32%|
|FIW||First Trust Water ETF||75.82%|
|COMT||iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF||31.05%|
|SARK||AXS Short Innovation Daily ETF||30.36%|
|CRYP||AdvisorShares Managed Bitcoin Strategy ETF||26.26%|
|HSCZ||iShares Currency Hedged MSCI EAFE Small Cap ETF||25.05%|
SCHD is focused on dividend-paying stocks, while VOO has a broader exposure to the overall U.S. stock market. If you want to optimize for dividends and share growth, SCHD would be a good choice for you. If you want to optimize for share growth from the overall U.S. stock market, VOO would be a better choice for you.Is S&P Global a dividend aristocrat? ›
The S&P Global Dividend Aristocrats is designed to measure the performance of the highest dividend yielding companies within the S&P Global Broad Market Index (BMI) that have followed a policy of increasing or stable dividends for at least 10 consecutive years.What is Dividend Aristocrats strategy? ›
Dividend Aristocrats strategies can allow investors to access quality income while seeking to avoid dividend traps, thus introducing defensive characteristics. • SPDR® ETFs offer a suite of Dividend Aristocrats strategies across of number of regional exposures.What is a super swan stock? ›
But what makes a Super SWAN a Super SWAN is the overall quality of a company, including: 5/5 dividend safety. 3/3 wide moat and stable business. 3/3 exceptional management quality/dividend culture.