These ETFs Are Full of Recent Dividend Raisers
Cash dividends are nice. Even better are the ones that investors can count on rising every year like clockwork.
Translation: Dividends are an important part of a portfolio's total returns over time, so it is logical to assume growing dividends can really make a positive dent for investors' long-term returns.
Although the first quarter and the early part of the second quarter are traditionally strong periods of dividend increase announcements, investors will not be disappointed by recent news flow on that front.
In the first half of this year, there were more than seven times as many positive dividend actions than there were cuts or suspensions, according to Standard & Poor's.
More importantly, forecasts are rosy for dividend payments and potential increases in the current quarter. Earlier this week, Markit Dividend Research released a report that predicted S&P 500 companies will pay $79 billion in dividends this quarter, a $9 billion increase from the same period last year, according to Barron's.
Combine that outlook with mounting corporate cash hoards and investors should have not problem finding ETFs with exposure to recent and future dividend raisers. Here are a few ETFs to help get the ball rolling.
First Trust NASDAQ Technology Dividend Index Fund (NASDAQ: TDIV)
As has been previously predicted, the tech sector is becoming a significant player on the dividend stage. The aforementioned Markit research confirms as much as the firm predicts 25 percent of third-quarter payouts will come from the tech sector.
Over the past several months, TDIV constituents such as Apple (NASDAQ: AAPL), Cisco (NASDAQ: CSCO), Intel (NASDAQ: INTC), Qualcomm (NASDAQ: QCOM) and Oracle (NASDAQ: ORLC) have boosted their payouts. Even if the search for recent tech dividend raisers ends there, that group still accounts for over 30 percent of TDIV's weight and does not include regular dividend boosters International Business Machines (NYSE: IBM) and Microsoft (NASDAQ: MSFT).
IBM and Microsoft combine for another 15.4 percent of TDIV's weight.
Vanguard Energy ETF (NYSE: VDE)
In April, as usually happens around that time of year, Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), the two largest U.S. oil companies, raised their dividends extending multi-decades streaks of boosting payouts. Occidental Petroleum (NYSE: OXY) has done the same and ConocoPhillips (NYSE: COP) followed suit earlier this month.
Those four stocks combine for 43.1 percent of VDE's weight. Schlumberger (NYSE: SLB) and Halliburton (NYSE: HAL), another eight percent of VDE, also raised their dividends earlier this year. VDE is not a specific dividend ETF, but it is a dividend growth fund. In 2007, VDE's annual distribution was 99 cents a share. Last year, it was almost $2.
Those in search of an alternative to VDE should consider the iShares U.S. Energy ETF (NYSE: IYE) as the aforementioned stocks combine for well over half that ETF's weight. Last year, IYE's dividend was about 68 cents a share compared with less than 43 cents a share in 2008, according to iShares data.
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