With Dividends Back in Style, This Dog Could Have Its Day
High dividend strategies like the
ALPS Sector Dividend Dogs ETF (SDOG) are back in style, and the value resurgence and low interest rates are just two reasons why.
SDOG tries to reflect the performance of the S-Network Sector Dividend Dogs Index, which applies the “Dogs of the Dow Theory” on a sector-by-sector basis using the S&P 500 with a focus on high dividend exposure. SDOG’s equal-weight methodology is important because it reduces sector-level risk and dependence of some groups that are considered to be imperiled value ideas.
History shows that after high dividend stocks lag the broader market by wide margins, as was the case last year, they often enjoy long subsequent periods of outperformance.
March 8, 2021
It feels like rising Treasury yields are taking a bite out of plenty of sectors. Bank stock ETFs aren’t one of them, indicating investors may want to consider exchange traded funds like the
KBWB tracks the widely followed KBW Nasdaq Bank Index.
“The Index is a modified-market capitalization-weighted index of companies primarily engaged in US banking activities. The Index is compiled, maintained and calculated by Keefe, Bruyette & Woods, Inc. and Nasdaq, Inc. and is composed of large national US money centers, regional banks and thrift institutions that are publicly traded in the US,” according to Invesco.
With rates still low by historical standards, some market observers believe Treasury yields can continue climbing, potentially benefiting KBWB in the process.