This article was originally published on ETFTrends.com.
Income investors looking for unique ways to bolster current income while capturing the potential for steadily rising payouts can consider the VictoryShares Dividend Accelerator ETF (NASDAQ: VSDA).
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The VictoryShares Dividend Accelerator ETF debuted in April 2017 and follows the Nasdaq Victory Dividend Accelerator Index (NQVDIV), which Victory Capital developed in partnership with Nasdaq. What makes VSDA unique is that it focuses on more than a company’s previous dividend track record.
Dividend growth as a means of trumping inflation could and arguably should serve to highlight the advantages of the ETFs that focus on dividend growth stocks. That group is comprised of well-established ETFs that emphasize dividend increase streaks as well as a new breed of funds that look for sectors chock full of stocks that have the potential to be future sources of dividend growth.
Companies with a record of raising dividends are more attractive than usual since they issue their dividends cautiously. These dividend payers typically include higher quality companies that are more cautious when raising dividends since they would do so without stretching their balance sheets.
VSDA “offers exposure to large-cap U.S. stocks, that feature not only a history of increasing dividends, but which also possess the highest probability of future dividend growth. It seeks to provide exposure to dividend growth, rather than yielding, offering a potential diversification benefit to high dividend yielding alternatives, particularly in a rising rate environment,” according to VictoryShares.
The ETF holds 75 stocks with a weighted average market capitalization of $68.6 billion. Over the last 12 months, VSDA's return on equity (ROE) is 28.4%, well above the 18.1% for the S&P 500.
Income-minded investors have also typically gravitated toward these high quality companies as firms that regularly raise dividends also tend to be confident about their ability to continue paying the dividends as the dividend increases are also calculated in line with future growth
Companies with a record of raising dividends are more attractive than high-yield dividend payers since they issue their dividends cautiously. These dividend payers typically include higher quality companies that are more cautious when raising dividends since they would do so without stretching their balance sheets.
VSDA allocates over 44% of its combined weight to consumer staples and industrial stocks while consumer discretionary and financial services names combine for over 30% of the ETF's weight.
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