In anticipation of the Federal Reserve raising interest rates, dividend exchange-traded funds have been under ample duress this year. Obviously, the Fed moved forward with its first rate hike in nearly a decade, leaving some dividend ETFs chock full of rate-sensitive sectors to face a world in which U.S. borrowing costs are expected to continue climbing next year.
Dividend Growers And The Fed
While richly valued, defensive, high-yield sectors are seen as vulnerable to hawkish changes in Fed policy, it could be the dividend growers and the corresponding ETFs that shine as interest rates rise. That should prove to be good news for funds such as the $281.3 million iShares Core Dividend Growth ETF (iShares Trust (NYSE: DGRO)).
DGRO follows the Morningstar US Dividend Growth Index, which requires constituent firms have a ...
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