A dividend-focused investment strategy generally targets companies with higher dividends that are expected to sustain and grow their dividends. Over time, securities that pay higher dividend yields tend to provide superior returns. Investors can use dividend distributions as income or reinvest them for portfolio growth. Dividend yield is a characteristic of stocks often targeted by factor-based strategies.
What is a dividend yield factor?
The dividend yield factor seeks exposure to companies that have demonstrated stable and increasing dividends. It provides a higher relative dividend yield and income to investors.
- Typically defined as dividend yield, dividend growth and dividend sustainability
- Common ways to measure dividend are through divided yields, payout ratio and dividend growth
Why does it matter?
Income needs may be better met through investment in higher-yielding equities — given historically low bond yields and an aging demographic, interest in dividend-yielding stocks may persist
Dividend-paying stocks provide investors with higher relative dividend yield and income
Companies that pay dividends tend to outperform during economic contractions and early recoveries, because they provide defensive income
Fidelity high dividend factor ETFs: A simple approach to income.
Fidelity Canada Dividend ETFs
Fidelity Canadian High Dividend ETF
Fidelity U.S. High Dividend ETF
Fidelity U.S. High Dividend ETF - US$
Fidelity U.S. High Dividend Currency Neutral ETF
Fidelity International High Dividend ETF
Fidelity U.S. Dividend for Rising Rates ETF
Fidelity U.S. Dividend for Rising Rates ETF - US$
Fidelity U.S. Dividend for Rising Rates Currency Neutral ETF
Also available as mutual funds which will invest in the underlying ETFs:
* This fund is a single-ticket global dividend solution with a tactical asset allocation overlay designed to generate income in various market environments.
Fidelity for dividend yield factor-based investment strategy
At Fidelity, our dividend factor funds seek to track the performance of tailor-made indexes that are actively designed. The Fidelity Canada High Dividend Factor Index is designed to reflect the performance of stocks from dividend-paying companies that are expected to continue to pay and grow their dividends. Typically, securities that pay higher dividend yields tend to provide superior returns over time. The Fidelity Canada Dividend for Rising Rates Factor Index is designed to find companies that are not only expected to pay and grow their dividends but also have a positive correlation of returns to increasing ten-year U.S. Treasury yields. It aims to provide protection in an environment of rising interest rates.
Single-factor exposure to high-quality dividend-paying companies
An outcome-oriented approach that seeks to deliver monthly income
An efficient complement to a well-diversified portfolio