“Dividend Monarchs: The Safe Play for Investors in Uncertain Times”
Investors worried about market volatility may want to consider stocks that have consistently proven themselves over time – also known as dividend monarchs.
This strategy is favored by Roundhill Investments, which recently launched its S&P Dividend Monarchs ETF. “It’s named that for a reason. It focuses on the dividend monarchs. These are companies that have increased their dividends each and every year for a minimum of 50 years,” said Roundhill’s chief strategy officer, David Mazza, in an interview with CNBC’s “ETF Edge” this week.
According to the firm’s website, this is the first U.S.-listed ETF designed to track the performance of these kinds of stocks. Mazza highlighted that these companies have weathered wars, recessions, and even a global pandemic while consistently rewarding shareholders with increased dividends every year.
As of November 9th, FactSet reports that the S&P Dividend Monarchs ETF’s top holdings are 3M, Federal Realty Investment Trust, Leggett & Platt, Black Hills Corporation, and Stanley Black & Decker.
“It’s a healthy overweight to consumer staples, industrials, and utilities. So, it is a mix of your traditionally defensive sectors,” noted Mazza. “In this ETF, [there’s] no exposure to IT and no exposure to communication services. So, for investors who are looking to reallocate away from those names that have led the market higher this year, something like the dividend monarchs ETF can be an opportunity for them.”
Todd Rosenbluth of VettaFi also views dividend monarchs as a safer play for investors, particularly as bond yields have decreased. “Dividends are going to be more appealing. Investors, through dividend strategies… can benefit from upside in the stock market but also get some of that downside protection and stability with dividends,” he said.
In uncertain times, the long-term stability and consistent performance of dividend monarchs offer investors a sense of security amidst market fluctuations.
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