Dividends4Life: Are SCHD And NOBL Good Dividend Growth Investments?

Among the dividend ETFs that I have examined, SCHD seems to come closest to accomplishing what dividend growth investors typically do. Here are things that I like about it. It picks stocks based on a combination of fundamental analysis, dividend, and dividend growth characteristics. Most of its stocks are ones that fit most investors' definition of high quality.Its yield (2.9%) is high enough to pass many dividend growth investors' minimum requirements. It has an extremely low expense ratio, so most of the dividends collected by the ETF actually flow through to the investor. Once a stock is in the portfolio, the criteria for keeping it are relaxed. This keeps turnover (and the expenses associated with turnover) down.

NOBL is not a good ETF, in my opinion. Its expense ratio is outrageous for an ETF that is following a common, well-known index. Its yield of 1.9% is the same as SPY's yield. A dividend-focused ETF should have a larger yield than a plain-vanilla S&P 500 tracker. NOBL's yield trails its own index's yield by a wide margin (the index's yield is 2.2%). Too much income is being absorbed by NOBL's expense structure, and that situation will get worse next year if NOBL terminates its subsidies of expenses as scheduled.

Source: Seeking Alpha

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