Dividend ETFs Maintain Merit in Economic Downturn

Dividend ETFs have surged in popularity as investors look for income and safety as concerns of a serious economic downturn intensify. 

Dividend strategies are a great source of income and have been among the most reliable sources of relative, if not absolute, performance this year. 

Data shows dividend ETFs totaled almost $50 billion in new assets during the first half of 2022, Todd Rosenbluth, head of research at VettaFi, told CNBC on July 10.

“Advisors have sought out equity income strategies due to the rising rate environment,” Rosenbluth said. “SDOG is unique compared to other dividend ETFs due to its sector and security level diversification.”

The ALPS Sector Dividend Dogs ETF (SDOG) has been ALPS’ most popular ETF by net inflows for the last few months. SDOG, which has $1.2 billion in assets under management, has seen $87 million in inflows year to date, according to VettaFi. 

SDOG offers exposure to a strategy that is largely similar to the “Dogs of the Dow” approach, which involves a portfolio consisting of the 10 components of the Dow Jones Industrial Average with the highest dividend yields. SDOG, however, casts a much wider net by drawing from the S&P 500 as its universe of potential stocks. 

Unlike many dividend-focused products, the fund maintains equal allocations to each of 10 sectors. The portfolio also consists of equal weighting to each component stock.

Other dividend ETFs to consider include the SmartETFs Dividend Builder ETF (DIVS), the WisdomTree US High Dividend Fund (DHS), and the T. Rowe Price Equity Income ETF (TEQI).

For more news, information, and strategy, visit the ETF Building Blocks Channel.

vettafi.com is owned by VettaFi, which also owns the index provider for SDOG. VettaFi is not the sponsor of SDOG, but VettaFi’s affiliate receives an index licensing fee from the ETF sponsor.

Read more on ETFtrends.com.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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