Motley Fool Favors 10.7% Dividend ETF Returns Over 4.7% Bond Yields as Inflation Runs at 3.5%
Updated
Updated · The Motley Fool · Jul 26
Motley Fool Favors 10.7% Dividend ETF Returns Over 4.7% Bond Yields as Inflation Runs at 3.5%
3 articles · Updated · The Motley Fool · Jul 26
Summary
3.5% inflation is the key reason Motley Fool says income investors should favor dividend-growth ETFs over bond ETFs in the current market.
Vanguard Total Bond Market ETF yields 4.7% to maturity with a 3.9% average coupon, but its fixed payouts can lose purchasing power as inflation stays elevated.
S&P 500 Dividend Aristocrats ETF yields just over 2%, yet its holdings have raised dividends for at least 25 straight years, giving investors income that can outpace inflation over time.
That dividend growth has also supported share-price gains, helping the fund deliver a 10.7% average annual total return since its 2013 inception.
The call extends Motley Fool's broader recent push toward diversified equity ETFs, but this report centers on inflation as the main reason to prefer dividend growth over fixed income.