This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Bad Times Don't Deter 'Dividend Aristocrats'

By Gary Gordon for ETF Expert

Is a bad U.S. economy good for stock ETFs? It depends on the type of stock ETFs -- large, small, growth, value, foreign, domestic. It also depends upon whom you ask.

Some analysts believe that, at the end of the trading days, earnings are all that matter. In fact, if large companies are cautious with their cash in uncertain economic times, the lack of investment in human resources or research actually boosts productivity and profitability. We're seeing plenty of that now. And while that flies in the face of "You gotta spend money to make money," it keeps the " dividend aristocrats" on target to raise dividends through thin and thick.

Keep in mind, economic forecasts are unbelievably flawed. The U.S. Federal Reserve even talks about "unusual uncertainty" in predicting what'll happen next. Yet most feel fairly certain that companies from Automatic Data Processing (ADP) to Johnson & Johnson (JNJ) to Wal-Mart (WMT) will raise dividends year after year.

Dividend investors should still use stop-loss limit orders to protect against a black swan collapse in equities. With that said, consider the S&P SPDR Dividend Fund (SDY), which tracks the S&P High Yield Dividend Aristocrats Index. Another possibility is WisdomTree Large Cap Dividend (DLN), which tracks a dividend-weighted index to reflect a proportional share of aggregate cash dividends by the component companies. The distribution yields are 3.5% and 3.25% respectively, seriously denting the idea of buying-'n'-holding a 10-year Treasury bond.

A bad U.S. economy can be good for another group of stock ETFs: foreign stock ETFs.

One can easily recall the sovereign debt crisis headlines that plagued European equities through the first five months of the year. Since then? European economies have exceded a low bar for GDP growth on a weak euro-dollar that benefited European exports.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
VGK $55.28 -0.40%
IWC $78.05 -0.09%
SDY $78.73 -0.68%
DLN $74.59 -0.65%
VWO $40.82 -1.30%

Markets

DOW 18,096.90 -106.47 -0.58%
S&P 500 2,098.53 -9.25 -0.44%
NASDAQ 4,967.1410 -12.76 -0.26%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs