With inflation running hot, getting additional income could mean taking on more risk for the fixed income investor, but there are alternatives that don’t come at a high price.

Rising consumer prices are certainly not relegated to the U.S. Countries around the globe are grappling with the same issue, giving fixed income investors headaches around the world.

“It probably isn’t much consolation for Americans struggling with the highest inflation in 40 years, but they are not alone,” a Washington Post article says. “In the European Union, prices are rising faster than at any time since the euro currency was introduced. The annual inflation rate in the United Kingdom hit 5.4 percent in December, the highest figure there in nearly 30 years. Canada’s consumer prices are rising twice as fast as before the pandemic.”

“Even in Japan, where prices have been depressed almost continuously since the collapse of the late 1980s real estate bubble, the central bank in recent days revised upward its assessment of inflation risks for the first time in eight years. Among major economies, only China has a lower inflation rate today than in early 2020,” the article adds further.

A Monthly Income Alternative

With monthly distributions at a 0.20% expense ratio, the Global X S&P 500 Quality Dividend ETF (QDIV) offers ETF investors an income alternative at a low cost. As of January 21, 2022, QDIV has a 30-day SEC yield of 2.33%.

The fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the S&P 500® Quality High Dividend Index. The fund invests at least 80% of its total assets in the securities of the underlying index.

The underlying index is designed to provide exposure to U.S. equity securities included in the S&P 500® Index that exhibit high quality and dividend yield characteristics, as determined by Standard & Poor’s Financial Services LLC, the provider of the underlying index.

QDIV gives investors:

  • Quality focus: QDIV invests in companies that score in the top 200 of the S&P 500 based on a variety of quality metrics including return-on-equity, accruals, and financial leverage.
  • High income potential: To qualify for QDIV, a company must score in the top 200 of the S&P 500 in dividend yield.
  • Monthly distributions: QDIV makes distributions on a monthly basis.

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