3 ETFs to buy out for Dividend Aristocrats!

There are stocks that pay dividends, and then there are the real dividend stocks. On the surface, the difference seems minimal, but experienced investors know that true dividend stocks represent companies that are committed not only to maintaining their payouts but also to increasing them.

More than 80% of S&P 500 companies pay a dividend, but a much smaller percentage qualifies for the various dividend aristocrat indices. These aristocrats represent the cream of the crop in terms of commitment to consistent payment growth.

Although the term “aristocrat” may seem snobbish, I find that these ETFs truly deserve our attention for long-term growth. Fortunately, the search for dividend aristocrats is facilitated by these funds dedicated exclusively to divine payouts.

If you're looking to add a bit of royalty to your portfolio, here are your three tickets to the red carpet:

SPDR S&P Dividend (ETF) (SDY)

Fees: 0.35%, or 35€ for 10,000€ invested Yield: 2.5%

With $12.9 billion in assets under management, the SPDR S&P Dividend is one of the largest U.S. dividend ETFs. More importantly, SDY tracks the S&P High Yield Dividend Aristocrats Index, which requires companies to have increased their dividends for at least 20 years.

The nearly 110 positions of SDY are drawn from the S&P 1500 index. Although it is presented as a high-yield ETF, the fund is not excessively allocated to typically high-yield sectors. For example, utilities and consumer staples account for about 28% of SDY's weight, while the telecommunications sector only represents 2.8%.

Financial services, a relatively low-profit sector seven years after the financial crisis, constitute the largest sector weighting of SDY at nearly 23%. This is an important feature as these companies have managed to continue increasing their payouts during the crisis, highlighting their commitment.

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

Fees: 0.35% Yield: 2.2%

If you thought the requirement of 20 consecutive years of increases for the SPDR was impressive, take a look at the ProShares S&P 500 Dividend Aristocrats ETF. NOBL requires its holdings to have payment increase streaks of at least 25 years.

Unlike SDY, NOBL does not position itself as a high-yield ETF, so its weighting in utilities of barely 2% is the second smallest sector allocation of the fund, with a yield of just over 2%. Instead, NOBL relies on predictable sectors as drivers of dividend consistency - consumer staples, industrials, and healthcare combined represent about 56% of NOBL's weight.

SPDR S&P Global Dividend ETF (WDIV)

Fees: 0.40% Yield: 4.4%

Among dividend ETFs, the SPDR S&P Global Dividend ETF is the lesser-known member of the team, but if you want a globally diversified dividend aristocrat, then WDIV is for you.

WDIV follows the S&P Global Dividend Aristocrats Index, which requires a minimum series of dividend increases of ten years for its positions. Being a global ETF, WDIV holds American stocks at a rate of 22.4%.

Add to that nearly 29% of Canadian and British stocks, and it becomes clear that WDIV is primarily a developed markets ETF, although it incorporates exposure to emerging markets.

WDIV does not shy away from high-yield sectors either, as utilities and telecommunications account for over 28% of the ETF's weight. Global financial aristocrats make up more than a quarter of WDIV's composition.

With a yield of 4.4% and annual fees of 0.4%, this fund offers an interesting exposure to global dividends.