Q – I am looking to hopefully generate some US dollars in dividends and down the road some stock appreciation. Proceeds might be used for purchasing a US property or renting. – Dennis F.
A – For starters, you need a US dollar account, if you don’t already have one. Then it’s a case of selecting which dividend securities you want to own. There are two possibilities.
The first is to invest in one or more US dividend ETFs. This provides diversification and relieves you of the responsibility for selecting individual stocks. One interesting fund to look at is the Invesco S&P High Dividend Low Volatility ETF (NYSE: SPHD). It’s coming off a bad year, but that’s because a large percentage of the portfolio is invested in interest-sensitive securities. Rising interest rates hit those stocks hard, but it now appears that rates have stabilized and may turn down in 2024.
That would be a great boost for real estate securities, which make up almost 18% of the portfolio, and utilities, which account for 17%. If the market reacts as expected in 2024, that will set the stage for some nice capital gains on top of healthy monthly distributions. These are currently about $0.17 for a projected 12-month yield of 4.8% based on a recent price of $42.46. (All figures in US dollars.)
For a more conventional ETF, consider the iShares Core Dividend Growth ETF (NYSE: DGRO). It invests in a well-balanced portfolio of dividend stocks with financials as the top sector at 18.4%, followed by information technology (17.4%) and healthcare (16.9%). As you can see, this is a very different approach to the Invesco fund. This ETF has a better short-term record (up over 10% year-to-date) and has performed well long-term (10.5% average annual return since inception in 2014).
Alternatively, you can pick your own stocks. Some of the highest yielders on our recommended list are Atlantica Sustainable Infrastructure PLC (NDQ: AY, yield 8.2%), Western Union (NYSE: WU, yield 8%), Verizon (NYSE: VZ, yield 7.1%), AT&T (NYSE: T, yield 6.7%), and Duke Energy (NYSE: DUK, yield 4.2%). – G.P.
