This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

New ETF Tries to Capture Dividend Growth

Stocks in this article: NOBL SDY SPY

NEW YORK ( TheStreet) -- Income-oriented investors will continue to place a heavy emphasis on dividends because even when the Federal Reserve does start to reduce its asset purchases, and then after that when it begins to set interest rates at more normal levels, bond yields will still be very low for quite a while.

The newest fund to offer a dividend strategy is the ProShares S&P 500 Aristocrats ETF (NOBL). The word "aristocrats" in the name of the fund indicates that the holdings in NOBL have raised their dividends at least once a year for 25 years.

NOBL owns 54 companies from the S&P 500 that meets this criterion. Consumer staples is the largest sector at 23%, followed by industrials at 15%, materials 13% and consumer discretionary and financials each with 12%.

Traditionally, higher-yielding sectors such as utilities and telecom each have less than 2% weightings in the fund, which brings up an important point: NOBL is not intended to be a high-yield vehicle but is instead meant to capture growth in dividends. The big idea of the strategy is dividends that increase will be able to increase the investor's income at a rate that exceeds the rate of inflation.

ProShares reports that the index underlying NOBL has a trailing yield of 2.57%, which after accounting for the fund's 0.35% expense ratio could put the yield of the fund at 2.22%.

The longstanding SPDR S&P Dividend ETF (SDY) has a similar strategy, owning stocks from the S&P 1500 Composite Index that have raised their dividends for at least 20 years. The constituency of SDY is similar to NOBL with staples, industrials, materials and financials all having large weightings in the fund.

Although SDY has 83 holdings, compared with 54 for NOBL, the two funds have 48 holdings in common, and so both NOBL and SDY are likely to look similar to each other. That creates a back test of sorts for NOBL.

SDY started trading in late 2005. Since then, it has looked similar to the S&P 500, albeit with a slightly higher yield, SDY has a trailing yield of 2.55%, compared with 2.02% for the SPDR S&P 500 (SPY). According to Morningstar, SDY has a total return of 67% since inception, compared with 58% for SPY.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 17,887.54 +82.74 0.46%
S&P 500 2,070.55 -0.10 -0.00%
NASDAQ 4,766.59 +1.21 0.03%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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