Hartford Funds and Ned Davis Research have revealed that over the past 50 years, S&P 500 companies that grow or initiate dividends have significantly outperformed their non-dividend counterparts, achieving an annualized return of 10.2% compared to just 6.8% for non-growers and 4.3% for non-payers. This trend underscores the value of investing in dividend growth stocks, particularly through exchange-traded funds (ETFs).
Three notable ETFs stand out for their focus on dividend growth: the Schwab U.S. Dividend Equity ETF (SCHD), which boasts a 3.3% yield and an 11% annualized total return; the iShares Core Dividend Growth ETF (DGRO), with a diversified portfolio of nearly 400 stocks and an 11.9% return; and the Vanguard Dividend Appreciation ETF (VIG), which has delivered a 10.1% return. Each fund emphasizes companies with strong dividend growth histories, positioning them well for continued performance.
For market professionals, these ETFs represent a compelling opportunity to capitalize on the historical strength of dividend growth stocks, making them worthy considerations for portfolio diversification and long-term returns.
Source: fool.com