Dividend-focused ETFs are in demand given investors’ drive for higher income. In particular, the Fed has turned patient on rates hike this year, pushing bond yields lower and thus raising the appeal for dividend-paying stocks.
Though the U.S. stock market is hovering near all-time highs, global growth concerns and weak earnings expectation have resulted in risk aversion. With May being less than 15 days away, investors are expected to turn cautious as seasonality plays a huge role in pushing stocks down in the next six months, per the old adage “Sell in May and Go Away.” According to this investment saying, the stock market has a long history of weak performance during the summer months (May to October).
Against such a backdrop, investors are becoming defensive and shifting their focus to products that provide stability and safety in a rocky market. Dividend products offer both -- safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices (read: 6 Dividend ETFs That Beat S&P 500 in the 10-Year Bull Run).
Dividend-paying securities are major sources of consistent income for investors when returns from the equity market are at risk. This is especially true as companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
As a result, we have highlighted some of the ETFs that offer better dividend growth opportunities when compared to other products in the space but might not necessarily have the highest yields. These funds hit all-time highs in the last trading session and have the potential to move higher as Fed remains dovish and uncertainty rules the market.
SPDR Portfolio S&P 500 High Dividend ETF SPYD – New High Price: $38.90
This fund provides exposure to the top 80 high dividend-yielding companies within the S&P 500 Index by tracking the S&P 500 High Dividend Index. It has AUM of $1.5 billion and charges 7 bps in annual fees. The fund has gained 14.6% so far this year and has a Zacks ETF Rank of #1 (Strong Buy) with a Medium risk outlook (read: 4 Dividend ETFs to Pick Amid Moderately Dovish Fed Minutes).
SPDR S&P Dividend ETF SDY – New High Price: $101.45
With AUM of $18.7 billion, this fund provides well-diversified exposure to 111 U.S. companies that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield. The fund charges 35 bps in fees and has risen 13.5% in the year-to-date timeframe. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
First Trust Value Line Dividend Index Fund FVD – New High Price: $33.07
This ETF provides exposure to 184 companies that pay above-average dividends and have potential for capital appreciation. It has accumulated $5.7 billion in its asset base and charges 70 bps in annual fees. The product has gained 13.9% so far this year and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Dividend ETF Hits New 52-Week High).
O'Shares FTSE US Quality Dividend ETF OUSA – New High Price: $34.16
This fund targets large-cap and mid-cap dividend-paying issuers in the United States that meet certain market capitalization, liquidity, high quality, low volatility and dividend yield thresholds, as determined by FTSE Russell. It has accumulated $470.8 million in its asset base and charges 0.48% in expense ratio. OUSA has risen 14.5% in the year-to-date timeframe and has a Zacks ETF Rank #1 with a Medium risk outlook.
ProShares S&P 500 Aristocrats ETF NOBL – New High Price: $68.79
This product focuses exclusively on companies in the S&P 500 that have grown dividends for at least 25 consecutive years. NOBL has amassed $4.6 billion in its asset base and charges 35 bps in annual fees. It is up 13.7% and has a Zacks ETF Rank #3 with a Medium risk outlook (read: 5 Amazing ETF Strategies for Q2).
Invesco S&P 500 High Dividend Low Volatility ETF SPHD - New High Price: $43.42
This ETF offers exposure to 50 stocks that historically have provided high dividend yields and low volatility. It has amassed $3.2 billion and charges 30 bps in annual fees. The fund has gained 14% so far this year.
Invesco Dividend Achievers ETF PFM - New High Price: $28.10
With $294.8 million, this fund offers exposure to 261 stocks that have increased their annual dividend for 10 or more consecutive fiscal years. It has expense ratio of 0.55% and has gained 14.1% in the year-to-date timeframe. PFM has a Zacks ETF Rank #3 with a Medium risk outlook.
First Trust NASDAQ Technology Dividend Index Fund TDIV - New High Price: $39.86
This ETF offers exposure to 93 technology and telecommunications companies that pay a regular or common dividend. It has AUM of $997.3 million and charges 50 bps in annual fees. TDIV is up 20.4% so far this year.
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ProShares S&P 500 Dividend Aristocrats ETF (NOBL): ETF Research Reports
First Trust NASDAQ Technology Dividend Index Fund (TDIV): ETF Research Reports
Invesco Dividend Achievers ETF (PFM): ETF Research Reports
SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
O'Shares FTSE US Quality Dividend ETF (OUSA): ETF Research Reports
SPDR S&P Dividend ETF (SDY): ETF Research Reports
First Trust Value Line Dividend Index Fund (FVD): ETF Research Reports
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD): ETF Research Reports
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