Dear Investor,
For the last two years, much of what passes as investment advice, or recommended investment products, attempted to guess and benefit from short-term trends.
However, many investors need long-term strategies and solutions to meet their financial and retirement goals.
Finally, over the last few months, fund management companies have launched several new funds that I believe allow investors to have long-term success to meet those goals.
Investing for dividend growth provides an almost guaranteed strategy for wealth creation. Over the decades, dividends have provided a large portion of the total return from stocks. As companies grow their dividends, share prices appreciate to match the increasing dividend rates.
The strategy offers a dull, but steady, way to build wealth. In a volatile stock market like the one we have today, dull and steady both feel pretty good.
Recently, new ETFs have hit the market focused on a combination of high current yield plus dividend growth. I see that as the best of both worlds. In fact, I’ve designed a complete 22-stock portfolio around this strategy – click here to check it out.
A few weeks ago, I highlighted two of these new funds. Today details of another new fund hit my inbox. Let’s go over all three together…
The Thornburg Income Builder Opportunities Trust (TBLD) is a recently launched closed-end fund (CEF) that uses a strategy like Thornburg’s mutual fund offerings. Primarily, Thornburg Investment Management operates a family of mutual funds. I remember recommending their short and intermediate-term muni bond funds back in the 1990s.
The Thornburg investment materials describe the TBLD strategy this way:
The Trust seeks current income and additional total return by investing in a broad range of income-producing securities to include both equity and debt securities of companies located in the U.S. and around the globe. The Trust additionally expects to employ an options strategy to generate current income from options premiums and to improve risk-adjusted returns. There can be no assurance that the Trust will achieve its investment objective, and you could lose some or all of your investment.
With these benefits, investors have access to:
- A current income stream and additional total return
- Active global allocation to navigate increasingly volatile markets
- Diversified income from global dividends and opportunistic fixed income
- Regular monthly distributions
TBLD shares currently yield 6.6%. The fund has a managed dividend policy, so dividends will not vary from month to month. The 6%-plus yield fits right in with the other two funds we’re talking about today.
The Hoya Capital High Dividend Yield ETF (RIET) launched in September 2021. The fund pays monthly dividends and currently yields 6.8%. Hoya Capital is a REIT-focused research firm, and the fund reflects that expertise. The RIET (note the difference between the stock symbol and the acronym) portfolio consists of 100 stocks from five different subcategories. Here is the breakdown:
The portfolio should generate rising dividends over time. Hoya will both reset the dividend rate every quarter and rebalance the portfolio semi-annually.
The InfraCap Equity Income Fund ETF (ICAP) launched last week on the New York Stock Exchange. Click here to see the InfraCap team ring the closing bell. The firm declared the first three monthly dividends, January through March, and ICAP also yields 6.8%.
This ETF will be actively managed, with at least 80% of the portfolio committed to dividend-paying equities. At the launch, the top five holders were Dow Inc. (DOW), AllianceBernstein Holding LP (AB), Exxon Mobil Corp. (XOM), Verizon Communications (VZ), and AT&T (T). These holdings indicate that ICAP will focus on blue-chip dividend growth stocks. Here is the initial market sector breakdown of the portfolio:
I think all three of these funds will produce above-average, long-term results using conservative investment strategies. I am curious to see how they perform head-to-head, so I made an equal investment in each fund to track real-life results in a separate account.For even higher returns using a conservative dividend strategy, check out my 36-month plan to get a portfolio that pays your bills for life.
