Insights
Find the latest news and insights from TrueShares below.
Dividends in a Rising Rate Environment
The US inflation rate reached 7.5% last month, hitting a 40-year high that’s nearly four times higher than the average inflation rate of the past decade. Facing higher-priced items in nearly every sector of the economy while simultaneously experiencing a lack of parallel increases in income leaves everyone with a dollar that doesn’t afford them what it used to; not even close. At the same time, the Federal Reserve is expected to begin raising interest rates in March as the first in a string of rate hikes intended to slow lending. While the higher interest rates seek to address the issue of rising inflation, the two forces together make borrowing and spending more expensive. These rapid rate increases are necessitating a reshuffling of assets in the market as increasingly more valuation-conscious people seek investment opportunities they can count on.
While the bond market has long been a steady and reliable place to park cash, this new inflationary period is a worst case scenario for bonds. Higher inflation will lead to higher interest rates and declining bond prices, which is particularly concerning for bonds with the longest cash flows. Investors typically interested in the relative calm of the bond market are now left with few alternative places to invest that still provide value and security. To funnel their capital into more productive markets, investors this year have already pulled $160 billion from money-market funds and $17.5 billion from bond mutual funds and exchange-traded funds. Much of that capital is being diverted into stock funds. While the stock market is not currently inspiring the utmost confidence in investors as an attractive growth opportunity, certain types of stocks offer a satisfactory balance of safety and valuation for those leaving the bond market out of necessity.
Enter dividends. Every quarter, many large publicly-traded companies pay a percentage of their net profits back to investors in the form of dividends. While not every company pays dividends and even fewer pay consistent and significant dividends, there are those that provide a steady stream of income to their shareholders. The consistency of dividends already makes them an attractive alternative to bonds; what’s even more alluring in this rising rate environment is that dividends also tend to grow over time, offering inflation protection. Risk-averse, valuation-conscious investors are taking notice — the dividend market has already generated $13 billion so far this year.
If diverting funds from bonds to dividends in response to a temporary market swing sounds like a knee-jerk reaction that will need to be undone when rates decline, it’s not. Dividends not only make capital work harder in the current environment, but they can also be a better long-term investment strategy when inflation eventually declines in the future, as it is projected to throughout 2022, albeit slowly.
When deciding which dividends to invest in, remember, not all dividend funds are created equal; some offer more consistent payments than others while all vary in long- and short-term risk level. TrueShares’ DIVZ ETF emphasizes lower volatility and higher dividends than the overall market by acquiring a concentrated portfolio of 25 to 35 favorably valued companies. Portfolio managers tend toward more traditional companies with market capitalizations greater than $8 billion, stable revenue streams, and more disciplined capital reinvestment. This dividend portfolio is a smart alternative for investors formerly interested in bonds as it offers an opportunity to divert investments into a relatively safe stock, with the added bonus of access to capital appreciation.
Thought Leadership,
Straight to Your Inbox
Disclosures
©2025, TrueShares, ©2025 TrueMark Investments, LLC. (“TrueMark”).
Before investing, carefully consider the TrueShares ETFs investment objectives, risks, charges and expenses. Specific information about TrueShares is contained in the prospectus and a summary prospectus, copies of which may be obtained by visiting www.www.true-shares.com. Read the prospectus carefully before you invest.
An investment in TrueShares is subject to numerous risks, including possible loss of principal. The ETFs are subject to the following principal risks: Authorized Participants, Market Makers, and Liquidity Providers Concentration Risk associated with ETFs; Equity Market Risk; Management Risk; Market Capitalization Risk (Large Cap; Mid Cap, Small Cap Stock); Market Risk; New Fund Risk: The Fund is a recently organized, non-diversified management investment company with no operating history. As a result, prospective investors have no track record or history on which to base their investment decision. Additionally, the Adviser has not previously managed a registered fund, which may increase the risks of investing in the Fund.
Depositary Receipts Risk. American Depositary Receipts (“ADRs”) have risks similar to those of foreign securities (political and economic conditions, changes in the exchange rates, etc.) and entitle the holder to all dividends and capital gains that are paid out on the underlying foreign shares.
Individual investors should contact their financial advisor or broker dealer representative for more information on TrueShares ETFs.
Investment Products and Services are: NOT FDIC INSURED / MAY LOSE VALUE / NO BANK GUARANTEE.
All registered investment companies, including TrueShares, are obliged to distribute portfolio gains to shareholders at year-end regardless of performance. Trading in TrueShares ETFs will also generate tax consequences and transaction expenses. The information provided is not intended to be tax advice. Tax consequences of dividend distributions may vary by individual taxpayer.
TrueShares ETFs are bought and sold through exchange trading at market price, not Net Asset Value (NAV), and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.
ETF shares may be bought or sold throughout the day at their market price, not their NAV, on the exchange on which they are listed. Shares of ETFs are tradable on secondary markets and may trade either at a premium or a discount to their NAV on the secondary market. ETFs trade like stocks, fluctuate in market value and may trade at prices above or below the ETF’s NAV. Brokerage commissions and ETF expenses will reduce returns.
Fund Intelligence Mutual Fund Industry and ETF Award shortlists and winners are comprised of individuals and firms who have submitted entries or been nominated via the online submission process, as well as through recommendations from leading market participants. Fund Intelligence Mutual Fund Industry and ETF Award judges will use the submitted application material, as well as any uploaded supplemental information, to determine which firm, individual or product they believe to be the most suitable and deserving winners for each category. Fund Intelligence Mutual Fund Industry and ETF Award judges have the discretionary power to move nominations into alternative categories that they think may be more suitable. Fund Intelligence Mutual Fund Industry and ETF Awards were decided by an independent panel of 20 judges with expertise across the asset management space.
TrueShares ETFs (the “Funds”) are registered with the United States Securities and Exchange Commission under the Investment Company Act of 1940. The fund is distributed by Paralel Distributors LLC, Member FINRA. Paralel is not affiliated with TrueMark Investments, LLC. TrueMark Investments, LLC, is the investment advisor to the Funds and receives a fee from the Funds for its services.
TrueMark Investments, LLC is the investment advisor to the Funds and receives a fee from the Funds for its services.
TrueShares ETFs are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this website should be considered a solicitation to buy nor an offer to sell shares of any fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction.