I want to add some ballast to our total set of high-yield assets that is a good fit for our Safe Haven Portfolio, explains Bryan Perry, a leading growth & income specialist and editor of Cash Machine.
The market is fraught with uncertainty and could swing heavily either higher or lower as the macro-economic picture becomes more-clear. Shares of Global X SuperDividend U.S. ETF (DIV) are in my view an excellent way to deploy some of the cash we have built up in recent weeks.
The security’s description indicates DIV combines a low-volatility strategy with a high-dividend-yield mandate. The fund’s index pulls from the U.S. equity space and screens for firms with large, consistent dividends and low volatility to the index’s market benchmark. Companies should have paid consistent dividends for the past two years and show reduced relative volatility, based on their beta.
Stocks are ranked and those with the highest dividend yields are selected. An equally weighted, 50-firm portfolio includes master limited partnerships (MLPs) and real estate investment trusts (REITs), two pass-through structures offering unique tax implications.
Thus, DIV has pumped-up exposure to financials and energy, while its low-volatility strategy includes exposure to utilities. The index is reconstituted annually, after quarterly reviews.
Having reviewed the 50 holdings in DIV, its blend of sectors and securities is very attractive, well-diversified and well-balanced. The fund pays out a monthly dividend and generates 1099 tax-related income. No K-1 reporting is needed, making DIV even more appealing. There is currently $724 million in assets under management (AUM).
As to the income generation for DIV, the distribution yield is right at 6.00% after the fund bumped its monthly payout in April. With so many energy companies hiking their dividends, the prospect of further dividend increases is pretty good.
What’s also nice about DIV is that it has a solid history of paying out strong dividend payments, even through the worst months of the pandemic. As companies have reinstated dividends and are raising them, DIV fund managers have a wider selection of high-yield low-volatility stocks to choose from, thereby better serving the goals of total return.
Speaking of total return, shares of DIV have returned 3.16% in 2022 to date, which is noteworthy in a market where all the major indexes are down for the year.
This is the kind of all-weather income I’m seeking to add to our market exposure — safe and steady income that can perform against inflationary headwinds and rising interest rates. Let’s put this solid 6% monthly payer to work. Buy Global X SuperDividend U.S. ETF under $22.