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4 High-Dividend ETF Winners Amid May's Trade Tantrum

Sanghamitra Saha

Despite cues of trade reconciliation at the start of 2019, tensions started creeping into Wall Street in May. The Trump administration lifted tariffs on $200 billion worth of Chinese goods from 10% to 25% on May 10 and China announced a retaliatory move —- a tariff hike on $60 billion worth American goods to 25% starting Jun 1. President Donald Trump is considering additional tariffs on an incremental $325 billion of Chinese imports (read: Full-Blown Trade Spat: 5 Most-Vulnerable Sector ETFs & Stocks).

Not only this, Washington has forbidden U.S. firms from doing business with Chinese giant Huawei, citing national security concerns. On May 23, the U.S. Commerce Department said that it was proposing a new rule to implement anti-subsidy duties on products from countries that undervalue their currencies against the U.S. dollar, another move that could undermine Chinese trade (read: Tense About Trade War? Follow Goldman With 5 ETF Strategies).

Markets in Red

Amid such doldrums, volatility increased in the market. SPDR S&P 500 ETF SPY has lost 3.8% in the past month whileSPDR Dow Jones Industrial Average ETF DIA and Invesco QQQ Trust QQQ retreated about 3.5% and 6.7% (as of May 24, 2019).

There are very few areas that beat the broader market in May, thanks to the return of trade tantrum. Only some safe-investing areas won in the month. Some dividend-paying stocks and ETFs are among those winners.

Why Dividend Stocks Outperform 

Dividend stocks often beat their non-dividend paying counterparts amid market tumult. Stocks with high dividend point to quality investing — a pre-requisite to making money in a volatile environment. Even if there is capital loss, dividend payments make up for it to a large extent.

A dovish Fed and trade tensions have kept treasury yields at low levels. As a result, investors often rush to higher yielding securities looking for solid and steady current income. Against this backdrop, we highlight a few high-dividend ETFs that beat the S&P 500 in the past month (read: 6 Dividend ETFs That Beat S&P 500 in the 10-Year Bull Run).

ETF Winners

ETRACS Monthly Pay 2xLeveraged US High Dividend Low Volatility ETN HDLV — Yield 10.66%, Up 1.6%

The ETN is linked to the monthly compounded 2x leveraged performance of the Solactive US High Dividend Low Volatility Index, less investor fees. The underlying index tracks the price movements of stocks which are publicly traded on U.S. stock exchanges.

First Trust North American Energy Infrastructure Fund EMLP — Yield 3.96%, Up 1.5%

This is an actively-managed ETF and is designed to provide exposure to the securities headquartered or incorporated in the United States and Canada and engaged in the energy infrastructure sector (read: Markets Jump as Fears Ease: 4 Sector ETFs at New Highs).

Invesco KBW Premium Yield Equity REIT ETF KBWY — Yield 6.77%, Up 1.3%

The underlying KBW Nasdaq Premium Yield Equity REIT Index is a dividend weighted index seeking to reflect the performance of approximately 24 to 40 small- and mid-cap equity REITs in the United States (read: Guide to 10 ETFs Yielding 6% or More).

Invesco S&P International Developed High Dividend Low Volatility ETF IDHD — Yield 4.48%, Up 0.8%

The underlying S&P EPAC Ex-Korea Low Volatility High Dividend Index comprises 100 securities in the S&P EPAC Ex-Korea LargeMidCap Index that have historically provided high dividend yields with reduced volatility over the past 12 months.

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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
 
Invesco KBW Premium Yield Equity REIT ETF (KBWY): ETF Research Reports
 
Invesco QQQ (QQQ): ETF Research Reports
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
UBS ETRACS Mnthly Pay 2xLevrged US High Div Low Volatility ETN (HDLV): ETF Research Reports
 
First Trust North American Energy Infrastructure Fund (EMLP): ETF Research Reports
 
Invesco S&P Intrnationl Develpd High Dividnd Low Volatilty ETF (IDHD): ETF Research Reports
 
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