DISCLAIMER - I am not a Financial Advisor and do not work for any Brokerage Firm. The opinions given are my own and are not to be used as professional advice. These are my findings and can hopefully help you to make informed decisions on investing. Consult a Broker or Lawyer before making any investment.
Dividend Growth Investing with ETFs
There are so many ways to invest our money today. Some are very lucrative and promise great returns. However, with great rewards, many times these come with much danger. Double-digit returns can also mean double-digit losses. On the opposite side of the coin, you can invest in Treasury Bonds or Certificates of Deposits and return a safe 4 to 6% a year. These safe investments should be a part of our total portfolio. But a well-diversified portfolio, if properly managed, can return better returns in years with reasonable market returns.
I believe that one of the best investments we can make today is in the Dividend Growth Investment category. These are companies that pay dividends and also have upward growth potential in stock price. There are dozens of companies that meet those qualifications. Some are in the Dividend Aristocrats
The Dividend Aristocrats and Dividend Kings are lists of stocks that may or may not be ideal DGI investing instruments. A Dividend growth stock will not only provide you with dividends, but the company will continue to grow and the stock will appreciate. So if a stock pays a 6% dividend and in a year grows 8%, you received a 14% growth in that one year. (Added value of your investment plus the dividend paid.) I code all my Stock Schwab Slices where I purchase most of my DGI stocks to automatically reinvest the dividends by purchasing more stock of the company.
So you are looking for high-quality companies with the ability to continue to grow. With this and the compounding of interest and growth price (appreciation), this can turn into a fine return. In 2023, I have been putting over ½ of my investment money set aside for ETFs and Stocks into DGI investments.
Finding companies that have good dividend returns and excellent growth potential are sometimes difficult. Many websites offer not only last year's growth rate, but the EPS percentages for next year and sometimes for the next 5 years. EPS stands for earnings per share. If a company has a projected EPS of 3% or more, that is probably a worthy candidate. Also, remember to look at the P/E ratio (Price to earnings ratio.) As I have mentioned in earlier articles, an ideal P/E is 8 or less. Many today are well over 20, so don’t let this deter you if other reasons are compelling to include the company.
After the recent loss of over 1500 points on the NYSE, some stocks are trading near their 52-week low range. This is probably a good time to consider investing in DGI stocks.
A few of my DGI favorite investments are O - Realty Income (Reit), CVX – Chevron, WMT – Walmart, ABBV – ABBVIE(an Abbott labs spin-off), PEP – Pepsi, VNO – Vornado Reality (Reit), DVN – Devon Energy, PRU- Prudential insurance, and KO – Coca Cola.
These all appear to have good growth potential and are paying dividends of 3% or more.
Perhaps the easiest method to invest in Dividend Growth Stocks is to buy ETFs that pick out a wide range of stocks paying dividends with upside potential. I have put together a list of all the ETFs that I have invested in. I was surprised by how many there are, and almost everyone has performed well this past year.
These are not listed in any specific order. I just wrote down the ticker code and the name of the funds. Some of them I have owned for years, but most were purchased in the past 12 months.
LVHD – Leg Mason ETF Investment
SDY – SPDR S&P Dividend ETF
DHS – Wisdom Tree US High Dividend
FVD – First Trust Value Dividend
SPHD – Invesco Exchange Traded S&P Dividends
REGL – ProShares S&P Midcap High Dividends
DGRO – Ishares Trust Dividend Growth
JEPQ – JP Morgan Exchange Traded Fund
QYLD – Global Nasdaq Dividend
PFF – I-shares Preferred Shares Income
NOBL – Proshares S&P Dividend
SPFF – Global Super Income ETF
SPYD – SPDR Portfolio S&P 500 Hi Dividend
FDVV – Fidelity High Dividend ETF
SCHD – Schwab US Dividends Equity ETF
While discussing income, I want to mention 3 Closed-End Funds that are all trading at the lower end of their trading range in the last 52 weeks.
PDI – Pimco Dynamic Income Fund
PDO – Pimco Dynamic Income Opportunity CEF
PTY – Pimco Corporate Income
These 3 are all paying over 10% in dividends and pay monthly dividends, not just quarterly. Be sure to research each investment on your own and prove the returns and current condition of the company. There are many ways to invest, but many wind up with negative returns.
The more you study and diversify, the better your overall return. Never stop reading or studying investments. Zig Ziglar said that 58% of college graduates never read another serious book after graduation. Those that read 25 books per year have acquired as much as another full 4 year degree each five years. No diploma, but you still have gained the knowledge.
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