Investing in the dividend leaders

Dividend growth investing delivers access to what are often the healthiest of the large-cap established companies, potentially rewarding investors in the form of growing dividends and delivering historically better overall performance. As displayed in the next chart, dividend growers and initiators have outpaced other market segments. Dividends provide a naturally stabilizing element of total return as a steady income stream reduces the longer-term impact of price movements, and dividend growth also provides a natural hedge against rising prices.1

Source: Ned Davis Research, Inc. from 1/31/72 – 6/30/17. Performance data quoted represents past performance. Past performance is no guarantee of future results. 

Future dividend growth leaders

Reality Shares sought to develop an analytical tool utilizing a forward-looking dividend growth-based security selection. We created an entirely new corporate dividend health rating system called DIVCON. The DIVCON methodology allows Reality Shares to evaluate dividend health in the pursuit of more intelligent and predictive security selection. DIVCON forecasts and ranks a company’s ability to increase or decrease their future dividends by evaluating each firm on seven quantitative factors. It seeks to deliver a more accurate picture of a company’s fiscal health and better predict the probability of an increase or decrease in a company’s dividend over the next 12 months. These factors give DIVCON a picture that is more consistent with future prospects rather than past dividend changes.

DIVCON evaluates and assigns a rating from 1 to 5 to each stock based on its assessment of financial health relative to prospects for future dividend growth. The healthiest companies earn the highest DIVCON scores and a rating of DIVCON 5, which means they exhibit the strongest likelihood of increasing their dividends in the next 12 months. The least financially stable companies are given the lowest DIVCON scores and are rated DIVCON 1, indicating their future dividend prospects are at risk. This presents to investors an easy to understand forward-looking ranking of dividend paying stocks, much like the buy-hold-sell ratings other ratings agencies might issue on securities.

The long-term power of dividend growth investing

Reality Shares offers the Dividend Leaders ETF (Ticker: LEAD) to deliver access to the potential benefits of dividend growth investing. LEAD systematically weights and invests in only the healthiest large-cap companies as identified by DIVCON. The Fund utilizes this rules-based approach to deliver diversified market exposure to future dividend growers.

  • Invests in high quality companies within the S&P500 with the highest probability to increase their dividend based on our DIVCON methodology
  • Is a sophisticated, highly analytical and institutional-quality, rules-based stock picking ETF

Access the companies with healthy, growing dividends through LEAD, an ETF focused on the dividend growth leaders. Click here to learn more about LEAD.

Learn how to access the power of dividend growth by reading our white paper below.

Institutions and advisors, click here for the institutional dividend growth white paper.

About Reality Shares

At Reality Shares, we focus solely on dividend growth investing and offer a range of ETFs pinpointing and capitalizing on investments in the stocks most likely to increase their dividends. Our proprietary DIVCON® model systematically ranks companies’ future dividend growth prospects based on seven quality factors that are correlated to dividend growth. DIVCON® was designed to also help avoid the stocks more likely to cut their dividends. Our rules-based, forward-looking methodology sets us apart in the market and allows investors to access and harness the power of dividend growth investing.

1 Data from 1/31/72 – 6/30/17 Source: Ned Davis Research, Inc. and Reality Shares. Past performance does not guarantee future results. Indexes are unmanaged and one cannot invest directly in an index. All stocks were categorized by the following methodology for total return of each 12-month period since 1972 period ended March 31, 2017. Dividend Cutters and Eliminators represents stocks in the S&P 500 that have lowered or eliminated their dividend; Non-Dividend-Paying Stocks represents non-dividend-paying stocks of the S&P 500; Dividend Payers with No Change represents all dividend-paying stocks of the S&P 500 that have maintained their existing dividend rate; and Dividend Growers and Initiators represents all dividend-paying stocks of the S&P 500 that raised their existing dividend or initiated a new dividend. Performance does not represent any unit trust or strategy.


Diversification does not ensure a profit or guarantee against loss.

For LEAD, there is no guarantee or assurance the methodology used to create the Benchmark Index will result in the Fund achieving positive returns. The Fund may be more susceptible to a single adverse economic or other occurrence and may therefore be more volatile than a more diversified fund. The Benchmark Index is constructed using a rules-based methodology based on quantitative models developed by Reality Shares. These quantitative models may be incomplete, flawed or based on inaccurate assumptions and, therefore, may lead to the selection of assets for inclusion in the Benchmark Index that produce inferior investment returns or provide exposure to greater risk of loss.

LEAD seeks long-term capital appreciation by tracking the performance, before fees and expenses, of the Reality Shares DIVCON Leaders Dividend Index (the “Benchmark Index”).

Carefully consider the investment objective, risks, charges and expenses before investing in Reality Shares ETFs. This and other important information can be found in the Fund’s prospectus, which may be obtained by calling 855-595-0240 or by clicking here. Please read the prospectus carefully before investing.

Investing involves risks, including possible loss of principal. Shares are not FDIC insured and may lose value. Past performance does not guarantee future results.

The DIVY Fund is actively managed and may fail to achieve its investment objective. There is no guarantee the Fund’s investment strategies will be successful. The Fund’s derivative investments in swaps, futures and forwards are subject to a number of risks, including correlation risk, market risk, counterparty credit risk and liquidity risk, which may negatively impact the Fund’s investment strategies and could cause the Fund to lose money. The Fund does not capture dividend payments or generate dividend income, and is not appropriate for investors seeking dividend income. The Fund uses a dividend isolation strategy whereby investment returns are based primarily on the change in expected dividend values reflected in the prices of the Fund’s portfolio holdings.

For LEAD, DFND and GARD, there is no guarantee or assurance the methodology used to create the respective Benchmark Index will result in the Fund achieving positive returns. The Fund may be more susceptible to a single adverse economic or other occurrence and may therefore be more volatile than a more diversified fund. Each Benchmark Index is constructed using a rules-based methodology based on quantitative models developed by Reality Shares. These quantitative models may be incomplete, flawed or based on inaccurate assumptions and, therefore, may lead to the selection of assets that produce inferior investment returns or provide exposure to greater risk of loss. The investment portfolio for DFND includes securities sold short. The investment portfolio for GARD may include securities sold short. Securities sold short create special risks which may result in increased volatility of returns and counter-party risk. Investments in short sales may also incur dividend and borrowing expenses and may result in the Fund being less tax-efficient. Please review the prospectus for important risks regarding the Funds.

ETF shares are not individually redeemable. Investors buy and sell shares of the Fund on a secondary market. Only market makers or ‘authorized participants’ may trade directly with the Fund, typically in blocks of 25,000 shares. Brokerage commissions will reduce returns. Market Price is based on the midpoint of the bid/ask spread at the close of the market and does not represent the returns an investor would receive if shares were traded at other times.

Reality Shares Advisors, LLC is the Investment Advisor. ALPS Distributors, Inc. is the Distributor for the Fund. ALPS Distributors, Inc. is not affiliated with Reality Shares Advisors, LLC.


Portfolio of Holdings and Fund Performance for LEAD, DFND, GARD, and DIVY.