While there’s nothing enjoyable about experiencing a market correction, it can sometimes provide just the jolt we need to get our portfolios back on the right track. Sure, owning high tech stocks when they’re returning more than 30% in 2017 with almost no volatility to speak of is great while you can enjoy it, but things can get a little nasty when the market turns. The S&P 500 (NYSEARCA:SPY) is still around 7% off of its all-time highs, but the ROBO Global Robotics And Automation Index ETF (NASDAQ:ROBO), one of 2017’s top performers, is still more than 12% off of its highs. If you’re one of those folks who rode the momentum wave to big gains in 2017, your portfolio might now be a little out of whack.
There’s never a bad time to add a quality dividend ETF to your portfolio, but now may be an especially good time. With growth and momentum stocks delivering such strong returns at almost no additional risk, many dividend stocks have found themselves getting left behind. The upside is that the market correction has pushed the valuations on many of these cash-rich companies back down to more appealing levels. Plus, corporate tax cuts will begin showing up in first-quarter financial statements, which could lead to companies making a big push to increase dividends and share buybacks. Add those catalysts together, and you’ve got a formula that could deliver above-average returns for dividend payers in 2018.
ETFs targeting higher equity yields have lagged considerably since the start of 2017, but funds invested in long-term dividend growers have by and large done pretty well. One of those funds targeting dividend growth companies, the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG), could do particularly well in 2018.
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