Some indices – like the Morningstar Dividend Yield Focus Index (benchmark for the iShares High Dividend Equity ETF (NYSEARCA:HDV), which can potentially be a good way to access Russ’ preference for US mega caps) – go a step further and also include sustainability screens in their methodologies. To be selected for the index, a company must have long-term competitive advantages likely to ensure dividend sustainability and growth.
Q: Why consider a dividend-paying stock ETF?
A: There aren’t many people with a solid reputation for selecting individual stocks. This is one reason why many investors may want to consider an ETF or other fund that seeks to replicate the performance of an index of dividend-paying companies. Such funds also may offer potentially lower volatility than a handful of individually chosen stocks and can provide diversification benefits that you’d have to buy many individual stocks to replicate. In addition, dividend focused ETFs, such as the iShares International Select Dividend ETF (NYSEARCA:IDV), can be used to access dividend payers outside the United States.
Sue Thompson, CIMA, Managing Director, is Head of the Registered Investment Advisor Group, overseeing the firm’s iShares and 529 sales efforts with registered investment advisors, family offices and asset managers. Sue is a regular contributor to The Blog. You can find more of her posts here.