These ETFs Have Stellar Dividend Growth
Dow components Coca-Cola (NYSE: KO), Procter & Gamble (NYSE: PG) and 3M (NYSE: MMM) share something in common. And no, it is not just the fact that all three make familiar brands used everyday by millions of people all over the world.
That trio, and plenty of other blue chip stocks, have lengthy streaks of increasing their dividend. P&G has raised its dividend every year since 1957. Minnesota-based 3M has done so every year since 1959. Coca-Cola's dividend increase streak is now at almost 50 years.
These are the type of dividend increases investors can set their clocks by and that is why they love these types of stocks. Finding dividend stocks is not hard. These days, neither is finding a plethora of dividend ETFs.
The question dividend growth hunters might be asking is can ETFs dividend growth on par with single stocks. With the following funds, the answer is a resounding "yes."
SPDR S&P Pharmaceuticals ETF (NYSE: XPH) Given the dividend reputation of the pharmaceuticals sector, the appearance of XPH on this list is not surprising. In the essence of fairness, both sides of the story need to be told. XPH only yields 1.55 percent, an amount that investors can easily surpass with any number of familiar pharma names.
Still, XPH's dividend growth has been noteworthy. The ETF's distribution for 2007 was just under $0.35 per share. This year, three quarterly payments have been made, combing for more than $0.82 a share. On top of that, XPH is up 16.6 percent year-to-date.
iShares Dow Jones U.S. Telecommunications Sector Index Fund (NYSE: IYZ) As is the case with XPH, the iShares Dow Jones U.S. Telecommunications Sector Index Fund tracks a sector known for being friendly to income investors. Dow components AT&T (NYSE: T) and Verizon (NYSE: VZ) combine for over 24 percent of IYZ's weight and those two stocks have impressive streaks of boosted dividends as well.
IYZ's trailing 12-month yield of 2.48 percent is certainly better than XPH's, but it is also well below what an investor can grab with AT&T or Verizon. The silver lining is IYZ has shown itself to be home to be reliable dividend by virtue of the fact that many of its components are serial dividend raisers.
The ETF debuted in mid-2000, so its first full year of dividend payments was 2001 when it paid out roughly $0.24 a share. IYZ's three dividend payments this year equal approximately $0.42.
Technology Select Sector SPDR (NYSE: XLK) One of the top dividend stories of 2012 has been the rise to prominence by the technology sector. The sector is now the largest dividend payer of the 10 industry groups tracked by the S&P 500 and ETFs are starting to benefit from this trend.
Often known as the ETF with one of the largest allocations to Apple (NASDAQ: AAPL), XLK is developing a tidy dividend track record. In 2007, XLK's payout for the entire years was not even $0.20 a share. In 2012, XLK has paid about $0.33 a share and that is with just three payouts to this point in the year.
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