Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary
Research > ETFs > ETF / ETP Commentary > 

Yield Is Nice, But Dividend Dependability Really Matters

BY | ETF Database
04/24/2025 | 177 VIEWS
In golf, there’s a saying that “driving is for show and putting is for dough.” Believe it or not, it’s applicable when it comes to dividend investing.In that instance, yield is the show and dividend growth is the dough, implying big dividend yields often catch investors’ attention while overshadowing the long-term benefits of steady payout growth. In the world of ETFs, income investors can access both flavors with the ALPS O’Shares U.S. Quality Dividend ETF (OUSA B+). It ranks as one of the more compelling options in the dependable growth category. Though not impervious to market pullbacks, dividend growth is proving to be one of this year’s less bad strategies. Specific to OUSA, that ETF is outpacing the S&P 500 by 500 basis points since the start of the year while sporting 1,000 basis points less in terms of annualized volatility. And to its credit, OUSA has topped some of the largest ETFs in both the payout growth and high dividend camps over the past three years.Dividend ETF OUSA Has Plenty of PerksHistory is just that — history — but in dividend investing, it can be instructive. Said another way, companies with track records of boosting payouts have done well for patient investors. “Finding stocks that have a history of paying dividends over the long term can also be valuable. One way of trying to gauge that is by researching a stock’s payout ratio, which tells you the percentage of earnings that go towards the dividend,” according to Charles Schwab research. Payout ratio gauges the percentage of net income a company distributes to shareholders in the form of dividends. Firms with elevated payout ratios — though not always — may be signaling that they’re ripe for payout cuts or suspensions. Regarding OUSA, all of that is relevant because the ETF leverages quality as part of its methodology. That could be a sign that many OUSA member firms aren’t burdened by their dividend obligations. Unlike some rival ETFs, OUSA doesn’t focus on length of dividend increase streaks, but its use of the quality factor can be an indicator of future dividend growth because quality can include elements such as a company’s cash flow and payout ratio. Quality can also be helpful in terms of avoiding heavily indebted companies, which may be dividend offenders down the road. “Lower debt-to-equity ratios are better because debt burdens can eat into future earnings. However, they can vary depending on the industry. For example, big industrial energy and mining companies tend to carry more debt than other industries. That’s why investors typically compare debt level of companies in the same industry,” concluded Schwab. For more news, information, and analysis, visit the ETF Building Blocks Channel. VettaFi LLC (“VettaFi”) is the index administrator and calculation agent for OUSA, for which it receives a fee. However, OUSA is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSA.

More Commentary

Sell on the Pop Prospects: April 23 Edition
BY | ETF Database
04/23/2025 | 69 VIEWS
ETF Market Booms: Record Launches & Sophisticated Strategies
BY | ETF Database
04/23/2025 | 127 VIEWS
Bitcoin to $100K Calls Renewed Amid Fresh Rally
BY | ETF Database
04/22/2025 | 72 VIEWS
View more Commentary

Search Commentary

Enter Keyword(s)
Filter Results

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.