Investing in Dividend-Paying Companies to Combat Inflation

The consumer price index rose by 0.9% in only one month — June — the largest increase since 2008. Many economists and the Federal Reserve say this is “transitory” because supply will eventually return to a level that can keep pace with demand. Whether that will be the case or not, recent rising prices on many consumer goods may have brought to mind the question: are your clients’ portfolios built to withstand inflation? Consider dividend exchange-traded funds (ETFs) as a potential solution.

When retirees and those near retirement think how to hedge inflation risk, they tend to think of fixed income as a potential solution. But interest rates and bond yields are near historic lows, reducing future expected returns. Other traditional income-generating investments such as certificates of deposit also have very low yields. Therefore, investors and their advisors are looking to dividend-paying stocks to fund a larger portion of their retirement.

Dividends have provided a means of income to meet living expenses without forcing your clients to sell securities and depleting their retirement nest egg. In addition, if the dividends increase over time, they can help your clients stay ahead of inflation. Of course, it’s important to note that dividend stocks are subject to market downturns and dividend payouts are not guaranteed.

There are many ways to build a portfolio of dividend stocks, but the amount of research involved in selecting not only one stock, but a diverse range of stocks is very time consuming. Owning dividend-paying companies through exchange-traded funds (ETFs) can be much more time efficient and they also provide instant diversification.

Sound Income Strategies offers the Sound Equity Income ETF (SDEI) specifically for those planning for retirement or in retirement. SDEI is actively managed by a team that has been providing income-generating solutions to clients for 20 years. The ETF’s primary objective is to generate current income via a dividend yield that is targeted to be at least two times that of the S&P 500 Index. The Fund also seeks to capture long-term capital appreciation as a secondary objective. SDEI seeks to achieve its investment objectives by investing in common stock issued by dividend-paying, mid- and large-capitalization companies.

The responsibility of securing a comfortable retirement is increasingly on advisors and investors. SDEI seeks to provide that combination of income as well as growth potential, in an effort to manage inflation risk.

IMPORTANT INFORMATION

Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus. A prospectus may be obtained by calling (833) 916-9056 or visiting www.soundetfs.com. Please read the prospectus carefully before you invest.

Investing involves risk, including the potential loss of principal. There is no guarantee that the Funds investment strategy will be successful.

Since the Fund is actively-managed it does not seek to replicate the performance of a specified index. The Fund may frequently trade all or a significant portion of its portfolio; and have higher portfolio turnover than funds that do seek to replicate the performance of an index. Equity securities such as common stocks are subject to market, economic and business risks that may cause their prices to fluctuate.

The securities of large-capitalization companies may be relatively mature compared to smaller companies and therefore subject to slower growth during times of economic expansion. The securities of mid-capitalization companies may be more vulnerable to adverse issuer, market, political, or economic developments than securities of large-capitalization companies.

The Fund is considered to be non-diversified, which means that it may invest more of its assets in the securities of a single issuer or a smaller number of issuers than if it were a diversified fund.

Shares may trade at a premium or discount to their NAV in the secondary market. The Fund is new and has a limited operating history. The Fund has a limited number of financial institutions that are authorized to purchase and redeem shares directly from the Fund; and there may be a limited number of market makers or other liquidity providers in the marketplace. These and other risks can be found in the prospectus.

Diversification does not assure a profit or protect against a loss.

  • Consumer Price Index: The Consumer Price Index (CPI) examines the weighted average of prices of a select group of consumer goods and services, such as transportation, food, and medical care. The CPI is often used to identify periods of inflation or deflation.
  • S&P 500 Index: A market ​capitalization-weighted index of the 500 largest U.S. publicly traded companies.​

It is not possible to invest directly in an index.

The Fund is distributed by Foreside Fund Services, LLC.

Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. The Retirement Income Store® , LLC and Sound Income Strategies, LLC are associated entities.

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