Well, it happened — again. The 10-year Treasury fell all the way to 2.3% last week on a string of bad geopolitical news and mixed economic data. The last time yields were this low was June of last year, in the early stages of the “Taper Tantrum.”
Could yields continue to go lower? Sure, they could. But it doesn’t matter. If you are an income investor with more than a five year horizon, you should be looking outside of the bond market for your income needs given the pitifully low yields on offer. And one area that still looks attractive at today’s prices is the world of dividend ETFs.
Company dividends — unlike bond interest — generally rise over time, giving dividend stocks far better long-term inflation protection than bonds.
Not all dividend stocks are the same; some are slow-growth dinosaurs that are little better than bonds with respect to their sensitivity to rising interest rates. Others are high-growth dynamos that share their bounty with their investors by continually raising their dividend. And in the same way, not all dividend ETFs are the same. Some are concentrated in slower-growth companies and sectors, while others are a who’s who list of quality growth stocks.
I don’t like choosing between growth and income; I want both. And today, I’m going to share some of my favorite dividend ETFs that I expect to deliver the two.