Don't Forget About Dividends

Capital gains tend to grab the headlines but dividends are the hard-working silent partner in our stock portfolios

Alastair Kellett 22 February, 2013 | 9:41AM

This article is part of Morningstar.co.uk's Equity Investing Week.

In the world of equity investing, capital gains tend to grab the headlines. When most of us buy a stock, we dream about its share price quadrupling to give us an outsized profit on the deal. But dividends are the hard-working silent partner in our stock portfolios, chugging away behind the scenes and often adding up meaningfully over time and forming a large part of our total return. For those seeking a low-cost vehicle for diversified exposure to dividend-paying companies, a decent choice is the SPDR S&P US Dividend Aristocrats UCITS ETF (UDVD).

Launched in October 2011, this ETF has grown to a size of roughly $800 million. It carries a total expense ratio (TER) of 0.35% per year, which puts it in line with other ETFs focused on large cap, US equities. The underlying benchmark, S&P High Yield Dividend Aristocrats Index, has a dividend yield of 3.02%, compared to 2.19% for the broad S&P 500 Index. 

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alphabet Inc A1,499.65 USD2.02
Amazon.com Inc3,057.04 USD5.77
Apple Inc373.85 USD2.68
McDonald's Corp188.50 USD2.71
Procter & Gamble Co121.63 USD0.62

About Author

Alastair Kellett

Alastair Kellett  is an ETF analyst with Morningstar Europe.

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