A Trio of "Aristocratic" Dividend ETFs

10/04/2017 5:00 am EST

Focus: ETFS

Jimmy Mengel

Editor, Outsider Club

I believe the single most effective and safe way to grow your wealth over time is to have a stable of solid dividend paying stocks — ones that you can hold forever without worrying about the day-to-day market swings, suggests Jimmy Mengel, editor of The Crow's Nest.

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There are also several ETFs that track dividend growers and dividend aristocrats.

Vanguard Dividend Appreciation ETF (VIG)

The VIG tracks the Nasdaq US Dividend Achievers Select Index, which is comprised of companies that have increased their dividends on an annual basis for at least 10 straight years.


This includes some of our portfolio holdings like like Aqua America (WTR), Johnson & Johnson (JNJ) and Abbott Labs (ABT) that are dividend aristocrats.

But since they lower the bar to ten years of dividend increases instead of the 25-year requirement for aristocrats, it also includes “newer” dividend payers like Stanley Black and Decker (SWK), Rollins Inc. (ROL) and Microsoft (MSFT).

VIG has $30.75 billion in net assets, a yield of 2.06% with an expense ratio of 0.08%. That is the lowest expense ratio of any of the ETFs I’ll cover

PowerShares High Yield Equity Dividend Achievers ETF (PEY)

The investment seeks to track the investment results of the NASDAQ US Dividend Achievers 50 Index. 
The fund generally will invest at least 90% of its total assets in common stocks of companies that comprise the underlying index.

This includes common stocks in the underlying index that have a consistent record of dividend increases, principally on the basis of dividend yield and consistent growth in dividends. The Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.

PEY has raised its dividend by an average of 10.8% per year over the last three years. It’s the smallest of the bunch, holding $914.97 million in assets, it yields the most at 3.18% has an expense ratio of 0.54%.

ProShares S&P 500 Dividend Aristocrats (NOBL)

The investment seeks investment results, before fees and expenses, that track the performance of the S&P 500 Dividend Aristocrats Index. 

The fund will invest at least 80% of its total assets in component securities (i.e., securities of the index and comparable securities that have economic characteristics that are substantially identical to the economic characteristics of the securities of the index).

The index contains a minimum of 40 stocks, which are equally weighted, and no single sector is allowed to comprise more than 30% of the index weight.

This is my favorite choice, based on the straight up dividend aristocrat criteria. The expense ratio is larger than VIG, but the security of the holdings makes it a worthwhile ETF to park your money in for decades to come.

This is the most pure of the dividend aristocrat ETFs we've mentioned. It has $3.05 billion in assets, a 1.91% yield and an expense ratio of 0.35%

You can’t go wrong with investments like these. As they say, slow and steady wins the race. For my money, I would pick up a position in VIG or NOBL and set it and forget it.

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