- The stock markets run isnt over. Money market funds now hold more than $3.6 trillion.
- One exchange-traded fund is an easy way to profit from this bull market.
- From its start in June 2014, its total return is nearly 7% better than the S&P 500.
The stock market has been on a run for a while now.
The total return of the bellwether S&P 500 Index from the bottom in March 2009 is 500%.
But the run isnt over. Money on the sidelines continues to grow.
The Investment Company Institute reports money market funds now hold more than $3.6 trillion.
This measure peaked above $3.8 trillion in March 2009
just before the stock market began moving higher.
The funds current balance is the highest it has been since then.
Thats why I recommend you consider an easy, one-click investment that beats the market
The Power of Dividends
Dividend reinvestment is when you use the dividends you receive to buy more shares.
From 1960 to 2018, reinvested dividends accounted for 82% of the total return of the S&P 500.
Take a look:
(Source: Hartford Funds: The Power of Dividends)
This means it makes sense to consider firms with a solid dividend history.
Dividend Stocks Can Be Very Lucrative
For those who are worried about a market drop, dividend stocks can serve as insurance. If the market drops, dividends will cushion the fall.
In the decade of the 2000s, stocks fell almost 1% per year on average. However, investors earned 1.8% from dividends. The drop would have been closer to 3% without them.
More importantly, though, investing in companies that grow their dividends the fastest can be very lucrative.
One exchange-traded fund (ETF) has proved this.
The iShares Core Dividend Growth ETF (NYSE: DGRO) has been public since June 2014. It buys U.S. stocks that grow their dividends year after year.
From its start to January 9 of this year, its total return is nearly 7% better than the S&P 500.
The biggest reason for the outperformance is its dividend.
The fund yields 2.25%. Thats more than the S&P 500s 1.82% yield.
Reinvesting Dividends Is Quick and Easy
You can reinvest your DGRO dividends through your broker.
You can call them to set it up. Or you may be able to do it online.
For example, at E-Trade, you can click on Dividend Reinvestment at the top of the page after you log into your account:
That will take you to a screen that allows you to select which securities you would like to reinvest your dividends into.
Its quick and easy.
And its cheap. Its expense ratio is only 0.08%. That means the funds operating costs will have a minimal impact on your investment.
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