The disappointing jobs report for the month of May has delayed a potential rate hike in the U.S. The U.S. Federal Reserve raised interest rates for the first time in more than a decade in December 2015. However, rates still remain near record low levels.
Yields on Treasury bonds are also at record low levels. In Europe, the European Central Bank (ECB) has begun buying corporate bonds as part of its program to fight deflation and boost economic growth. Yields on German government bonds dropped to record low levels earlier this week.
Given the present environment, yield-hungry investors are likely to flock to dividend stocks. This could boost ETFs such as the BMO US Dividend ETF CAD (TSX: ZDY). The fund invests in stocks of companies operating across diversified sectors. The fund invests in dividend paying stocks of companies across all market capitalizations. It hedges the U.S. dollar currency exposure back to Canadian dollars. It focuses on factors like dividend growth, yield, and payout ratio to create its portfolio.
ZDY currently offers a dividend yield of 2.79%. Year-to-date, the ETF has gained 1.73%. In the last one year, it has returned more than 14%.
