As global dividend payouts expand, one dividend strategist says that investors should consider targeting dividend growth, rather than dividend yield.

Christian Magoon, CEO of Amplify ETFs, says that as U.S. monetary policy tightens and other central banks begin to taper their purchases of fixed-income products, dividend growth strategies should outperform high-dividend yield strategies.

“There are more interest rate increases on the horizon, and it’s time to alert many income investors not to only look at duration on the fixed-income side, but also at their exposure to high dividend strategies versus dividend growth strategies,” says Magoon. “We think that most investors are too allocated to high dividend strategies and not enough to dividend growth strategies. That could lead to a shortfall in comparison to their performance expectations, and now is the time to sound the alarm.”

Amplify ETFs offers a suite of dividend products that target growth and yield, including the YieldShares High Income ETF (YYY), the Amplify YieldShares Prime 5 Dividend ETF (PFV) and the Amplify YieldShares CWP Dividend & Option Income ETF (DIVO).

Magoon argues that many high-yielding dividend stocks are simply too expensive as more investors have sought income from their equity allocations. While dividend growers tend to have lower yields, their ability to pay out over time can benefit certain investors.

“Today, many yielding equities have been bid up during the low-rate environment, while some dividend growers are still value opportunities,” says Magoon. “Some dividend growth companies not only continue to grow their dividends, they’re also getting higher multiples because they’re in demand and they’ll continue to be in demand. Over time, if you take a long-term perspective, there’s a great place for dividend growth investing and your return could exceed what you get in a high dividend product.”

Dividend growth took off in the first quarter of 2017, when equities posted the fastest underlying increase in global dividends since late 2015.

According to the most recent “Global Dividend Study” from Janus Henderson, global dividends rose $218.7 billion in the first quarter, expanding at an underlying 5.4 percent rate year over year. Dividend growth was strong across most industries and regions, except Europe.

Each year Janus Henderson, formerly Henderson, analyzes dividends paid by the 1,200 largest firms by market capitalization, and estimates dividends for stocks outside of the top 1,200.

In the U.S., total dividends were down 0.7 percent to $106.9 billion, driven by a $7 billion falloff in special dividend payments. Underlying dividend growth, which does not include special dividends in its calculation, increased to 5.3 percent. Janus Henderson credits the underlying growth to the rebound of the U.S. banking sector.

Magoon laments that sector concentration is one of the pitfalls of dividend investing strategies, whether they target growth or yield. Yield-targeting strategies often focus on consumer discretionary stocks, utilities and financial companies, while dividend growth strategies hold more consumer staples, health-care and technology companies.

“You have to be aware of the sector skew,” says Magoon. “A lot of times the sector allocation makes dividend growth products great complements to high-yield dividend products.”

While most dividend strategies should start out with a balance between growth and yield, Magoon says that allocations toward growth should increase as clients’ investment horizons lengthen.

ETFs help take the decision-making out of investors’ hands. While dividend-paying equities are likely to increase in value over the short term as bond yields remain low, income-oriented investors may be reluctant to sell high-yielding stocks with poor fundamentals or outrageous valuations.

“These indexes are emotionless and analytically driven. They’re making investment decisions that don’t revolve around fear and greed,” says Magoon. “Oftentimes, that’s the biggest problem with equity investors.”

World economic growth is picking up, said Janus Henderson, and as companies boost earnings from increased revenues and the exploitation of new efficiencies, they’re likely to share more of that money with investors through buybacks and dividends.

Janus Henderson expects 3.9 percent underlying dividend growth in 2017, projecting $1.176 trillion in global dividends. A slightly weaker dollar means that investors should benefit from dividend growth that is not as disguised by exchange rate effects.

“2017 has started on a really encouraging note for income investors, at least if you look beyond one-off special dividends,” said Alex Crooke, head of global equity income at Janus Henderson, in a statement. “Growth was broadly based across many sectors and countries, too. The outlook for the world economy looks better at present than at any time in the last few years. That means companies can grow profits and dividends at a faster pace.”