Dividends

A New Breed: Income-Driven Dividend Funds

Starting this week, we begin a new series about exchange-traded funds that will focus on income-driven dividend funds. Today’s featured ETF is O’Shares FTSE US Quality Dividend ETF (OUSA), a U.S. fund with total net assets of $209.98 million.

Income-driven dividend funds typically focus on tracking companies that are regular dividend payers, based on certain criteria that vary from fund to fund. OUSA specifically gives investors access to large- and mid-cap U.S. issuers, which are selected based on quality, low volatility and dividend yield.

The high quality and low volatility requirements are designed to cut risk by reducing exposure to companies that may possess high dividend payouts but have endured large price declines.

Since its launch on July 14, 2015, OUSA’s share price has gone up 9.34% to notch a decent gain. Its year-to-date gain of 7.92% significantly outperforms the S&P 500’s 1.79% rise. OUSA has a dividend yield of 2.30%, and its expense ratio is 0.48%. OUSA has shown a fairly stable upward trend in its share price, starting in 2016, based on the chart below.

You likely will recognize most of the top holdings of OUSA. They include Johnson & Johnson (JNJ), 5.37%; Exxon Mobil Corporation (XOM), 5.33%; Verizon Communications (VZ), 4.40%; AT&T (T), 4.29%; and Procter & Gamble (PG), 3.46%. The fund is fairly diversified, since it holds more than 140 companies in its portfolio. Its top 10 holdings comprise only 37.81% of the fund.

If you are interested in investing in a relatively stable income-driven fund with some of the biggest dividend-paying company names in its portfolio, I encourage you to look into O’Shares FTSE US Quality Dividend ETF (OUSA).

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Doug Fabian

Doug Fabian is the Editor of Weekly ETF Report, a free weekly e-newsletter, and the newsletter Successful ETF Investing. He’s also the host of the syndicated radio show, “Doug Fabian’s Wealth Strategies.” Doug also edits the fast-paced trading service ETF Trader’s Edge, for investors who want to take their profits to the next level. Taking over the reins from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert’s Investment Digest. Doug became a member of the “SmartMoney 30” in 1999 — a listing of the most influential individuals in the mutual fund industry. In the feature, SmartMoney magazine exclaims that Doug is the best-known “trend follower” among the $56 billion (and growing) group of financial advisors. In 2001, Doug wrote “Maverick Investing,” published by McGraw-Hill. He also regularly appears at seminars around the country, stands out on the pages of the largest newspapers (The Wall Street Journal, The Los Angeles Times, and The New York Times), and speaks on national television (CNBC, Fox News, and Bloomberg Forum). For more than 35 years, Successful ETF Investing (formerly the Telephone Switch Newsletter and Successful Investing) has produced double-digit percentage annual gains. Doug has become known for his expert knowledge and timely use of innovative tools, such as exchange-traded funds, bear funds, and enhanced-index funds to profit in any market climate. For more information about Doug’s services, go to http://www.fabian.com/