This article explores the concept of smart beta ETFs, focusing on WisdomTree Japan SmallCap Dividend ETF (DFJ) as a specific example. It examines DFJ’s performance, risk, sector exposure, and alternatives, providing insights for investors considering this fund for their portfolios.
Dividend investors seeking inflation-adjusted income in today’s market face challenges due to high prices and lofty index valuations. Covered call funds like the JPMorgan Nasdaq Equity Premium ETF (JEPQ) have emerged as a source of consistent and solid income. JEPQ’s strategy of selling out-of-the-money options allows investors to participate in some upside potential while generating income. Since its inception in May 2022, JEPQ has delivered total returns of 23.53%, outperforming the S&P 500 (SPY) with returns of 23.25%. With volatility levels expected to rise throughout 2024 due to factors such as the presidential election, a slowing economy, and geopolitical tensions, JEPQ is well-positioned to offer solid income with acceptable risks. However, it’s important to note the fund’s limitations, particularly during market downturns or if volatility drops significantly.
Dividend investing has a proven track record of outperforming non-dividend-paying stocks, leading many investors to rely on Dividend Aristocrats. However, focusing solely on the duration of dividend increases is insufficient.
To ensure sustained dividend growth, investors should consider companies that can generate sufficient free cash flow (FCF) to support their payouts. This article highlights seven dividend growth stocks with strong FCF that can maintain their dividend payments.
LVMH, UnitedHealth Group, Dick’s Sporting Goods, Domino’s, AbbVie, Automatic Data Processing, and Home Depot are all recommended as potential investments. These companies have demonstrated consistent dividend growth, high FCF generation, and resilience to economic challenges.
Amidst market uncertainties, dividend-paying stocks offer investors a chance to secure higher yields and potentially hedge against inflation. With a supportive market environment and record dividend payouts, now is an opportune time to tap into this opportunity. Seeking Alpha’s Quant Dividend Grading System can assist investors in identifying stocks with strong dividend safety, growth potential, and investment fundamentals. Based on this system, we have curated a list of ten high-yield dividend stocks with yields ranging from 3.33% to 9.11%, consecutive payments of up to 61 years, and long-term CAGRs reaching 16.5%. These stocks represent a valuable starting point for investors seeking to bolster their portfolios with consistent income and long-term growth potential.
Dividend investing offers numerous advantages for building long-term wealth and financial security. This detailed guide delves into the benefits of dividend investing, including mitigating downside risks, covering unexpected expenses, providing additional income streams, and fighting inflation. By investing in dividend-paying stocks, individuals can enhance their financial well-being and secure a more stable future.
As the market grapples with geopolitical risks and interest rate uncertainties, investors may consider exploring alternative investment approaches. Quantitative and passive investing strategies offer opportunities to navigate these challenges and potentially generate returns. Julien Palardy, Managing Director and Head of Quantitative and Passive Investing at TD Asset Management, shares his team’s strategies that aim to address these factors. These strategies encompass alpha-driven approaches, risk-driven strategies, and dividend strategies, catering to various investor objectives.
