The hunt for dividends 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 prerequisite to making money in this volatile environment.
The rise in interest rates has so far been common globally as central banks have been engaged in containing inflation. However, things are changing now as the Fed is likely to cut rates sooner than expected due to the cooling of inflation and the labor market. The chances of a Fed rate cut as early as September are pretty high.
As of July 9, the U.S. treasury benchmark yield was 4.28% and ended the week at 4.18%. This means the demand for higher current income will be high now, which should help high dividend-paying stocks and ETFs.
Why Pick High-Dividend Securities?
In this scenario, investors may be interested in equities that have the potential to offer capital appreciation as well as benchmark-beating yields. After all, dividends are one of the ways to ride out the turbulent times.
Here we zero 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 10.79% 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 4.42% annually.
Vanguard High Dividend Yield ETF VYM
The underlying FTSE High Dividend Yield Index consists of common stocks of companies that pay dividends that generally are higher than average. The fund charges 6 bps in fees and yields 2.93% 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 and REITs that rank among the highest dividend-yielding equity securities in the United States. The fund yields 6.60% annually and charges 45 bps in fees.
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Get it free >>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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