Dividend stocks maybe help “narrow the performance gap for a value investor,” according to a recent article in Barron’s.
But the article adds, “whether a company pays a
dividend isn’t the only factor to consider.” It cites comments from T.
Rowe Price Dividend Growth fund Tom Huber, who warns investors to be mindful of
sectors before “diving in to add dividend investments.” Huber cites utilities, real estate investment trusts and consumer staples as examples of sectors that have held up well over the past five years.
The article notes that ETFs offer the advantage of low management fees compared with actively run funds, but Huber says its important for investors to consider the sector weightings of such funds. He notes, for example, that a fund with a heavy leaning toward utilities would probably outperform one with less exposure to the sector.
The article offers the following chart showing five income-oriented large-cap value ETFs that have outperformed the index over the past five years.