February 22, 2024


Investors concerned about the market may want to consider stocks that have stood the test of time — otherwise known as dividend monarchs.

That’s a top strategy for Roundhill Investments, which launched its S&P Dividend Monarchs ETF this month.

“It’s named that for a reason. It focuses on the dividend monarchs. These are companies that have increased their dividends each and every year for a minimum of 50 years,” Roundhill’s chief strategy officer David Mazza told CNBC’s “ETF Edge” this week.

According to the firm’s website, it’s the first U.S.-listed ETF designed to track the performance of these kinds of stocks.

“These companies have been through it all. They’ve been through wars, recessions, most recently a global pandemic and they’ve been able to reward shareholders with an increase in their dividends each and every year,” said Mazza, who refers to many of them as President “Dwight Eisenhower”-era stocks.

As of Nov. 9, FactSet reports the S&P Dividend Monarchs ETF’s top holdings are 3M, Federal Realty Investment Trust, Leggett & Platt, Black Hills Corporation and Stanley Black & Decker.

‘No exposure to IT and no exposure to communication services’

“It’s a healthy overweight to consumer staples, industrials, and then utilities. So, it is a mix of your traditionally defensive sectors,” he noted. “In this ETF, [there’s] no exposure to IT and no exposure to communication services. So, for investors who are looking to reallocate away from those names that have led the market higher this year… something like the dividend monarchs ETF can be an opportunity for them.”

VettaFi’s Todd Rosenbluth also sees dividend monarchs as a safer play for investors right now.

“I think we’re seeing as bond yields have come down, dividends are going to be more appealing. Investors, through dividend strategies… can benefit from upside in the stock market but also get some of that downside protection and stability with dividends,” the firm’s head of research said.



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