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Analyzing the Consumer Cyclical Sector’s Dividend Yield: Part Two

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Consumer cyclical industries

Appliances, tools & housewares, casinos and gaming, and home furnishings retailers ended in the red on June 1. Tires and rubber products, home furnishings, appliances, tools and housewares, homebuilding, construction supplies and fixtures, broadcasting, toys and juvenile products, and advertising and marketing prices generated negative six-month returns.

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Going forward

This sector includes luxuries and is affected by economic fundamentals. Consumer expenditure on clothes, shoes, home furnishing, automobiles, and auto parts has seen a declining trend. However, spending on hotels, motels, and cruise lines has increased driven by growing demand from traveling and traveling-related activities. However, rising income, lower unemployment, slow inflation growth, growing wealth, and consumer confidence are expected to drive the sector.

Dividend ETFs

The ProShares S&P 500 Aristocrats (NOBL) offers a dividend yield of 1.8% at a PE of 21x. It has 24% and 12% exposure to consumer non-cyclicals and consumer cyclicals, respectively. The WisdomTree Europe SmallCap Dividend (DFE) offers a dividend yield of 2.7% at a PE of 14.6x. It has 24% and 15% exposure to the industrials and consumer cyclical sectors, respectively.

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