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3 Dividend ETFs With High Inflows in April

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U.S. equity markets are facing widespread volatility, thanks to trade negotiations and recent geopolitical risks owing to the U.S. strike on Syrian chemical facilities. 

 

Although the markets shrugged off fears stemming from the Syria attack and proposed sanctions on Russia as the earnings season is underway, the long-term impact of such factors might increase the appeal of dividend investing (read: Stocks and ETFs with Juicy Dividend Yields).

 

Into the Headlines

 

Market turbulence has brought portfolio reallocation back into play. Tensions between Washington and Beijing have been bothering the markets for quite some time now. Although talks of negotiations have been doing the rounds, nothing can be said for certain. To sail through market volatility, allocating a portion of your portfolio to safe dividend funds seems like a judicious option (read: ETFs to Buy as Trade War Fears Abate).

 

Moreover, the recent chemical attack in Syria has increased tensions pertaining to U.S.-Russia relations. The recent missile strikes on Syrian chemical plants by a U.S.-led coalition with France and U.K. has complicated the situation. Anatoly Antonov, Russia’s ambassador to the United States, told the Wall Street Journal, “We warned that such actions will not be left without consequences. All responsibility for them rests with Washington, London and Paris. Insulting the president of Russia is unacceptable and inadmissible.”

 

In the event of a response by Russia, Iran or Syria, the markets might take a hit on actual war concerns, instead of only a trade war. Although the odds of that happening are low, it is advisable to safeguard one’s portfolio against such severe events. This is because during such volatile times, it is difficult to beat algorithmic trading outlets, which are programmed to start selling by merely reading news headlines indicating at an adverse event. 

 

Moving on to interest rate, the CME Fed watch tool currently forecasts two more rate hikes in 2018, which many analysts believe has already been priced in by the Wall Street. In such a scenario, dividend-paying securities provide consistent income to investors. The uniqueness of these securities is their increased returns when political uncertainty weighs on markets, more so because apart from high dividend, these securities exhibit low volatility as they are stable and mature companies.

 

Let us now discuss a few ETFs focused on providing exposure to U.S. equities with relatively high dividend yields.

 

Vanguard Dividend Appreciation ETF VIG

 

This fund seeks to provide exposure to U.S. companies offering high dividends. 

 

It has AUM of $27.3 billion and charges a fee of 8 basis points a year. From a sector look, the fund has high exposure to Industrials, Consumer Services and Health Care with 33.2%, 19.0% and 12.0% allocation, respectively. The fund’s top three holdings are Walmart WMT, Johnson & Johnson JNJ and Microsoft Corp MSFT with 4.0%, 4.0% and 3.9% allocation, respectively. The fund has returned 17.4% in a year and 0.5% year to date. It has a dividend yield of 1.87% and has garnered $241.1 million in inflows in the first two weeks of April, per etf.com data.

 

Vanguard High Dividend Yield ETF VYM

 

This fund seeks to provide exposure to large, established U.S. companies providing high dividends. 

 

It has AUM of $20.6 billion and charges a fee of 8 basis points a year. From a sector look, the fund has high exposure to Information Technology, Financials and Health Care with 17.0%, 14.2% and 12.9% allocation, respectively. The fund’s top three holdings are Microsoft Corp, JP Morgan Chase & Co JPM and Johnson & Johnson, with 7.0%, 3.9% and 3.5% allocation, respectively. It has returned 12.9% in a year but has lost 1.3% year to date. It has a dividend yield of 2.94% and has garnered $123.6 million in inflows in the first two weeks of April, per etf.com data. 

 

Schwab U.S. Dividend Equity ETF SCHD

 

This fund seeks to provide cheap exposure to U.S. companies paying out high dividends. 

 

It has AUM of $7.4 billion and charges a fee of 7 basis points a year. From a sector look, the fund has high exposure to Consumer Staples, Information Technology and Industrials with 21.9%, 21.7% and 15.1% allocation, respectively. The fund’s top three holdings are Exxon Mobil Corp XOM, Intel Corp INTC and Pfizer Inc PFE with 4.8%, 4.6% and 4.6% allocation respectively. The fund has returned 15.6% in a year but has lost 2.5% year to date. It has a dividend yield of 2.61% and has garnered $63.3 million in inflows in the first two weeks of April, per etf.com data.