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Want Dividend Dependability? This ETF Has It

BY | ETF Database
9:44 am ET 11/02/26 | 5 VIEWS
With bond yields elevated and the dividend yield on the S&P 500 not far removed from historic lows, some investors may be thinking dividend stocks aren’t worth the trouble. However, the opposite school of thinking may be the winning approach. After all, by some estimates, dividend reinvestment accounts for roughly 30% of the S&P 500’s total returns over extended holding periods. Plus, steady dividend payers are known for reducing portfolio volatility. That is to say, there’s value in payout dependability. The ALPS O’Shares U.S. Quality Dividend ETF (OUSA B) is one of the ETFs that answers that bell.At a time when bond yields are undoubtedly tempting, some investors seeking high yields and the potential for greater capital appreciation than is available in the bond market may be examining high dividend equities. However, not all high-yield equities are created equal. Some are yield traps, but OUSA’s emphasis on quality mitigates yield-trap risk. “While income from bonds is plentiful right now, equity income is challenged. In such an environment, dividend investors can be tempted into stocks with impressive-looking yields that are ultimately illusory,” noted Morningstar’s Dan Lefkovitz.OUSA Has Protection, ReliabilityOUSA is home to a fair amount of Dividend Kings, or those firms with 50-year payout increase streaks (or more). Some of those names, such as Altria (MO) and Verizon (VZ), have high payout ratios. However, that isn’t a cause for alarm, because an array of OUSA member firms score well on the distance to default metric. An important gauge of dividend health, “distance to default, measures financial health. It gauges the risk that a company’s assets will fall below the sum of its liabilities, considering equity value and share price volatility on the theory that the market can sniff out weakness before it shows up in balance-sheet disclosures,” explained Lefkovitz. “Companies are compared with sector peers. The bottom half of the universe on distance to default is ineligible for dividend indexes.” That metric is useful in terms of assessing dividend reliability. Speaking of reliability, some of the stocks appearing on Morningstar’s list of durable dividend names are OUSA holdings. That group includes the aforementioned Altria and Verizon, as well as Hershey (HSY), Medtronic (MDT) and PepsiCo (PEP), among others. Bottom line: Big yields are eye-catching, but dependability matters in dividend investing. OUSA is dependable. For more news, information, and analysis, visit the ETF Building Blocks Content Hub. VettaFi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for OUSA, for which it receives an index licensing fee. However, OUSA is not issued, sponsored, endorsed, or sold by VettaFi. VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSA.

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