Dividends4Life: The Appeal Of Dividend ETFs

The Appeal Of Dividend ETFs

Posted by D4L | Friday, October 21, 2011 | | 0 comments »

Dividend investing is one of the oldest and most popular strategies amongst retail and institutional equity investors on Wall Street. Legends like Warren Buffet and Benjamin Graham are well known advocates of this value investing approach, and their success in the financial markets speaks volumes about this timeless strategy. Research conducted by Standard & Poor’s revealed that dividend components were responsible for 44% of the total return in the last 80 years of the S&P 500′s history.

The ETF boom of the last several years has provided investors with options for accessing new asset classes and pursuing various investment strategies previously inaccessible to smaller retail investors. There are dozens of funds available that offer exposure to dividend paying companies, including both explicit dividend-weighted products and others that focus on sectors that have a tendency to make hefty payouts. Many of the popular dividend ETFs are linked to indexes that consider cash distributions paid in the process of selecting benchmark components and assigning weightings. This strategy may appeal to investors who wish to stray away from traditional cap-weighted products, while also focusing on securities that make meaningful cash payouts.

Source: ETFdb

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