The hunt for dividend in the equity market is always on irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains? And if investors are mired in a web of equity market uncertainty, global growth worries and geopolitical crisis, the lure for dividend investing will increase.
Investors should note that not all dividend stocks serve the same purpose. While the high-yield ones are known for offering hefty current income, stocks with dividend growth point to quality investing — a pre-requisite to making money in a volatile environment.
While the stock market has recorded an incredible rally in 2023, topping all expectations, its journey in the second half has been rough. We have just started November after enduring lackluster September and October.
Meanwhile, high interest rates are now common globally as central banks are intending to contain inflation. Although inflation has cooled from its highs last year, there is still a significant risk that it could rebound due to lingering economic pressures, such as rising oil prices on geopolitical concerns.
If inflation remains sticky and interest rates remain higher for longer, the sectors (most importantly the tech sector) that have driven this year’s stock market rally might experience a pullback. If this is not enough, the U.S. banking industry is far from stable.
Why to Pick High-Dividend Securities
In the above-said scenario, investors may be interested in equities that have the potential to offer capital appreciation as well as upbeat yields. After all, dividends are one of the ways to ride out the turbulent times.
Even if the stock or the fund falls, higher current income would go a long way in protecting investors’ total returns. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.
We thus have zeroed in on some high-dividend ETFs.
ETFs in Focus
Global X SuperDividend ETF (SDIV)
The underlying Solactive Global SuperDividend Index tracks the performance of 100 equally weighted companies that rank among the highest dividend-yielding equity securities in the world. The index provider applies certain dividend stability filters. The 100-stock ETF charges 58 bps in fees and yields 13.03% annually.
SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
The underlying S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield. The fund yields 7 bps in fees and yields 5.19% annually.
Vanguard High Dividend Yield ETF (VYM)
The underlying FTSE High Dividend Yield Index which consists of common stocks of companies that generally pay higher-than-average dividends. The fund charges 6 bps in fees and yields 3.26% annually.
Global X SuperDividend U.S. ETF (DIV)
The underlying INDXX SuperDividend U.S. Low Volatility Index tracks the performance of 50 equally weighted common stocks, MLPs & REITs that rank among the highest dividend-yielding equity securities in the United States. The fund yields 7.72% annually and charges 45 bps in fees.
iShares Core High Dividend ETF (HDV)
The underlying Morningstar Dividend Yield Focus Index offers exposure to high-quality U.S. domiciled companies that have had strong financial health and the ability to sustain above-average dividend payouts. The fund HDV charges 8 bps in fees and yields 4.20% annually.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>iShares Core High Dividend ETF (HDV): ETF Research Reports
SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
Vanguard High Dividend Yield ETF (VYM): ETF Research Reports
Global X SuperDividend U.S. ETF (DIV): ETF Research Reports
Global X SuperDividend ETF (SDIV): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
