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) - Get Report

. 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) - Get Report

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) - Get Report

. According to Morningstar, SDY has a total return of 67% since inception, compared with 58% for SPY.

It is worth noting that the dividends paid by SDY have not grown consistently even though the fund invests in companies that increase their dividends. SDY's dividend this September was 40.2 cents; the September 2006 dividend was higher at 42.9 cents.

The likely explanation has to do with changes in the fund's holdings over time. When SDY first started trading, the financial sector made up 25% of the fund versus just 16.9% now. One aspect to the financial crisis was of course that many of the big banks had to eliminate their dividends, and so they were removed from the fund.

Where there is no yield requirement, a higher yielding company that gets removed can be replaced by a lower yielding company. The new company would have to have increased its dividend for the number of required years but could still be lower yielding than the company it is replacing.

The indexes underlying both SDY and NOBL are not static, and so this effect that has occurred with SDY could very well occur with NOBL in the future.

While the premise behind the dividend growth strategy is solid, accessing it through an exchange-traded fund may not be. Seven years is a meaningful period of time and the fund tracking dividend growth hasn't been able to increase its dividend.

However, not all investors are comfortable buying individual stocks, and owning either SDY or NOBL will offer the security of not owning an individual stock on the day it drops 10% because it needs to cut or eliminate its dividend.

At the time of publication, the author held no positions in any of the stocks mentioned.


This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.