ProShares has expanded its suite of dividend growth ETFs with the launch of two new funds on Cboe BZX Exchange.
The new funds are the ProShares S&P Technology Dividend Aristocrats ETF (TDV US), which focuses on dividend growers within the US technology sector and related industries; and the ProShares Russell US Dividend Growers ETF (TMDV US), which explores the broad US stock market for dividend growers with multi-decades-long credentials.
Dividend growth strategies focus on companies with long track records of increasing dividend payments.
Consistent dividend growers are thought to be more likely to share favourable characteristics such as strong balance sheets and a history of stable cash flows and earnings growth.
Consistently increasing dividends is also perceived to be a means for management to signal confidence in a company’s growth prospects.
Michael Sapir, co-founder and CEO of ProShare Advisors, commented, “Consistent dividend growth may be one of the best indicators of a company’s health. We are committed to offering this powerful strategy across a broad array of market caps, geographies and sectors.”
[pullquote]”Consistent dividend growth may be one of the best indicators of a company’s health.”
– Michael Sapir, co-founder and CEO of ProShare Advisors. [/pullquote]Technology sector
The ProShares S&P Technology Dividend Aristocrats ETF is linked to the S&P Technology Dividend Aristocrats Index. The index comprises S&P 500 companies from the information technology sector as well as technology-related companies in the communication services and consumer discretionary sectors.
To be eligible for inclusion, a firm must have raised their dividends for a minimum of seven consecutive years. This criterion tends to focus the strategy on well-established tech companies with less risk compared to the broader technology sector.
A minimum of 25 stocks must be selected, and the index can relax its eligibility criteria in order to meet this threshold. Stocks are equally weighted and rebalanced quarterly. The index is reconstituted annually in January. It currently consists of 34 constituents and offers a dividend yield of 2.04%.
The ETF comes with an expense ratio of 0.45%.
Broad market
The ProShares Russell US Dividend Growers ETF tracks the Russell 3000 Dividend Elite Index. The index screens the Russell 3000 universe of large-, mid- and small-cap stocks for companies that have increased dividend payments for at least 35 consecutive years.
The index selects a minimum of 40 stocks, which are equally weighted subject to a sector cap of 30%. Reconstitution occurs annually in January with the index rebalanced on a quarterly schedule.
The index currently consists of 68 constituents and offers a dividend yield of 2.52%. The largest sector exposures are consumer staples (20.5%), industrials (18.2%), utilities (14.7%), financials (13.3%), and materials (11.8%).
The ETF’s expense ratio is 0.35%.
$7.5bn suite
The new funds bring the total number of ProShares dividend growth ETFs to eight, which collectively house over $7.5 billion in assets under management. In addition to the new US tech and broad market funds, the suite includes funds targeting dividend growers within the US large-cap, US mid-cap, US small-cap, international developed, European, and emerging market segments.
The suite’s flagship fund is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL US) which contains $6.0bn AUM.