As part of my goal on the Green Money Stream to help you reduce expenses and grow your income, I will occassionally write posts discussing my own investment strategies or interesting investment ideas I have come across. However, you should always do your own research before deciding on an investment strategy.

One of my Key Principles is to follow a dividend stock investing strategy. Specifically, I invest in companies that are in the S&P 500 Dividend Aristocrats Index, among others. These are companies that have not only been paying dividends for a long time but have increased dividend payouts year over year for 25 years or more. The idea is that these rising dividend payment streams will provide a nice hedge against inflation in retirement. I purchase shares from a selection of these companies on a regular basis through my Vanguard brokerage account.

So I was interested to hear of a new ETF offered by ProShares called the ProShares S&P 500 Aristocrats ETF (ticker: NOBL). This ETF is currently made up of the 54 companies in the S&P 500 who have been consistently raising dividends for at least 25 years. As far as I know, this is the first fund that solely tracks the Dividend Aristocrats and presents an interesting opportunity for dividend investors. The fund seeks to track the S&P 500 Dividend Aristocrats Index. Since inception (May 2005) this index has had a higher return and lower volatility than the S&P 500. Companies in the Dividend Aristocrats list are generally less volatile than their counterparts since they are large, well established companies.

The funds expense ratio is also attractive at 0.35%, although the fund prospectus indicates that the charged expense ratio is actually lower than the total annual operating expenses for the fund. ProShares is currently waiving an expense component of 0.43%. This waiver is set to expire September 30, 2015, so the rate will likely be closer to 0.78% in 2 years time. Still not a terrible expense ratio, although it is on the high side for a fund that is simply tracking an index.

An alternative to the ProShares ETF is Vanguards Dividend Appreciation ETF* (ticker: VIG). VIG seeks to track the performance of stocks in the NASDAQ Dividend Achievers Select Index. The Dividend Acheivers are companies that have been raising their dividend payouts annually for at least 10 years. So the Aristocrats are actually as subset of the Acheivers. VIG is a popular ETF and is currently composed of 146 companies. In keeping with Vanguards low cost philosophy, VIG has an expense ratio of just 0.10% well below the expense ratio for NOBL.

Of course, investing in an ETF is not necessarily the same as having a personal dividend stock investing strategy like mine. I prefer to invest in companies that not only have a long history of increasing dividends, but also have a minimum dividend of around 2.5%. Some of the companies in the S&P 500 Dividend Aristocrats Index yield close to and even less than 1%. However, the overall yield of the index is currently 2.57% which is a respectable yield especially in consideration of the low-maintenance appeal of purchasing an index fund.

Overall, ProShares new fund offering deserves a look if you are interested in investing in the Dividend Aristocrats. It may be a good way to passively invest in an index that has outperformed the S&P 500 while exhibiting lower volatility.

Are you a dividend investor? Do you prefer investing in mutual funds and ETFs or do you like to create your own portfolio of individual stocks?

*Disclosure: I am currently invested in VIG.