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Investors concerned about the market may want to consider stocks that have stood the test of time – also known as dividend monarchs.
That’s a top strategy for Roundhill Investments, which launched its S&P Dividend Monarchs ETF this month.
“It’s called that for a reason. It focuses on the dividend kings. These are companies that have increased their dividends every year for at least 50 years,” David Mazza, Roundhill’s chief strategy officer, told CNBC’s “ETF Edge” this week.
According to the company’s website, this is the first U.S.-listed ETF designed to track the performance of these types of stocks.
“These companies have been through it all. They have been through wars, recessions and most recently a global pandemic, and they have been able to reward their shareholders every year with an increase in their dividends,” says Mazza, who refers to many of them as President “Dwight Eisenhower” era stocks.
As of November 9, FactSet reports that the top holdings of the S&P Dividend Monarchs ETF are 3M, Federal Real Estate Investment Trust, Leggett & Platt, Black Hills Corporation And Stanley Black & Decker.
‘No exposure to IT and no exposure to communication services’
‘It is a healthy excess weight consumer goods, industrialistsand then utilities. So it’s a mix of traditionally defensive sectors,” he noted. “In this ETF [there’s] no exposure to IT and no exposure to communication services. So for investors looking for a reshuffling of the names that took the lead market higher this year…something like the Dividend Monarchs ETF could be an opportunity for them.”
VettaFi’s Todd Rosenbluth also sees dividend monarchs as a safer play for investors right now.
“I think we see it as bond yields have fallen, dividends will become more attractive. Investors can benefit from the uptrend in the stock market through dividend strategies, but can also get some of that downside protection and stability with dividends,” said the company’s head of research.
