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Dividend investing has been in vogue amid bouts of volatility and uncertainty over sky-high inflation, rising interest rates and a dull economic outlook. This is especially true as these are major sources of consistent income for investors in any type of market though they do not offer dramatic price appreciation.
As such, many dividend ETFs have been on the rise. Morningstar Dividend Leaders Index Fund (FDL - Free Report) , WisdomTree U.S. High Dividend Fund (DHS - Free Report) , iShares Core High Dividend ETF (HDV - Free Report) , Pacer Global Cash Cows Dividend ETF (GCOW - Free Report) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) are leading the space this year and will continue to move higher given the prevailing market uncertainty (read: A Guide to the 10 Most-Popular Dividend ETFs).
The dividend-focused products offer safety through payouts and stability in the form of mature companies that are less volatile amid large swings in stock prices. This is because the companies that pay out dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
Market Trends
The S&P 500 logged in the longest weekly losing streak since 2011 and the Dow Jones registering the first seven-week losing streak since 2001. The tech-heavy Nasdaq Composite saw the sixth consecutive weekly decline. Notably, the S&P 500 saw the worst start to a year since 1939 and is on the brink of bear territory (read: 5 Beaten-Down ETFs to Buy at Attractive Prices).
The Fed has started raising interest rates more aggressively to fight inflation that will hit consumers and businesses. However, consumer spending remains strong given the elevated wage growth and lower unemployment rate. The central bank has raised interest rates by 50 bps, marking the biggest interest-rate hike since 2000.
The COVID-19 variant concerns and the resultant lockdown measures in China have sparked worries over global economic expansion that will continue to weigh on investors’ sentiment. Additionally, a war in Ukraine worsened disruptions in the flow of goods across borders, resulting in skyrocketing food and energy prices and threatening corporate profits. Corporate results have turned out weaker than expected for the first quarter.
Let’s delve deeper into the above-mentioned ETFs:
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) – Up 6.6%
First Trust Morningstar Dividend Leaders Index Fund offers exposure to stocks that have shown the highest dividend consistency and dividend sustainability by tracking the Morningstar Dividend Leaders Index. It holds 98 stocks in its basket, with key holdings in healthcare, consumer staples, communication services and utilities.
With AUM of $2.5 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and trades in a solid volume of about 910,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
WisdomTree U.S. High Dividend Fund (DHS - Free Report) – Up 6.5%
WisdomTree U.S. High Dividend Fund offers exposure to U.S. equity from high dividend-yielding companies by tracking the WisdomTree U.S. High Dividend Index. It holds 314 stocks in its basket, with key holdings in energy, healthcare, consumer staples, financials, and utilities that account for double-digit exposure each.
WisdomTree U.S. High Dividend Fund has amassed $1 billion in its asset base and trades in a solid volume of around 86,000 shares a day. It charges 8 bps in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook (read: 6 Dividend ETFs Up At Least 6% YTD & Yielding At Least 3%).
iShares Core High Dividend ETF (HDV - Free Report) - Up 5.9%
iShares Core High Dividend ETF offers exposure to 75 high-quality and high-dividend stocks. It tracks the Morningstar Dividend Yield Focus Index and is slightly concentrated on the top firms, with each making up for no more than 8.2% share.
iShares Core High Dividend ETF has AUM of $10.1 billion and trades in a solid volume of around 1.3 million shares a day. It charges 8 bps in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook.
Pacer Global Cash Cows Dividend ETF (GCOW - Free Report) – Up 5.3%
Pacer Global Cash Cows Dividend ETF attempts to provide a continuous stream of income and capital appreciation over time by screening for companies with a high free cash flow yield and a high dividend yield. It holds 101 stocks in its basket and charges 60 bps in fees per year from investors.
Pacer Global Cash Cows Dividend ETF has been able to manage $389.2 million in its asset base and trades in an average daily volume 164,000 shares.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) – Up 4.8%
Invesco S&P 500 High Dividend Low Volatility ETF offers exposure to 51 stocks traded on the S&P 500 Index that historically have provided high-dividend yields and low volatility. It follows the S&P 500 Low Volatility High Dividend Index. Invesco S&P 500 High Dividend Low Volatility ETF is widely spread across sectors, with utilities, consumer staples, healthcare and real estate receiving double-digit exposure each.
Invesco S&P 500 High Dividend Low Volatility ETF has amassed $3.8 billion and charges 30 bps in annual fees. The fund trades in an average daily volume of 2 million shares.
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5 Dividend ETFs Crushing the Market This Year
Dividend investing has been in vogue amid bouts of volatility and uncertainty over sky-high inflation, rising interest rates and a dull economic outlook. This is especially true as these are major sources of consistent income for investors in any type of market though they do not offer dramatic price appreciation.
As such, many dividend ETFs have been on the rise. Morningstar Dividend Leaders Index Fund (FDL - Free Report) , WisdomTree U.S. High Dividend Fund (DHS - Free Report) , iShares Core High Dividend ETF (HDV - Free Report) , Pacer Global Cash Cows Dividend ETF (GCOW - Free Report) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) are leading the space this year and will continue to move higher given the prevailing market uncertainty (read: A Guide to the 10 Most-Popular Dividend ETFs).
The dividend-focused products offer safety through payouts and stability in the form of mature companies that are less volatile amid large swings in stock prices. This is because the companies that pay out dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
Market Trends
The S&P 500 logged in the longest weekly losing streak since 2011 and the Dow Jones registering the first seven-week losing streak since 2001. The tech-heavy Nasdaq Composite saw the sixth consecutive weekly decline. Notably, the S&P 500 saw the worst start to a year since 1939 and is on the brink of bear territory (read: 5 Beaten-Down ETFs to Buy at Attractive Prices).
The Fed has started raising interest rates more aggressively to fight inflation that will hit consumers and businesses. However, consumer spending remains strong given the elevated wage growth and lower unemployment rate. The central bank has raised interest rates by 50 bps, marking the biggest interest-rate hike since 2000.
The COVID-19 variant concerns and the resultant lockdown measures in China have sparked worries over global economic expansion that will continue to weigh on investors’ sentiment. Additionally, a war in Ukraine worsened disruptions in the flow of goods across borders, resulting in skyrocketing food and energy prices and threatening corporate profits. Corporate results have turned out weaker than expected for the first quarter.
Let’s delve deeper into the above-mentioned ETFs:
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) – Up 6.6%
First Trust Morningstar Dividend Leaders Index Fund offers exposure to stocks that have shown the highest dividend consistency and dividend sustainability by tracking the Morningstar Dividend Leaders Index. It holds 98 stocks in its basket, with key holdings in healthcare, consumer staples, communication services and utilities.
With AUM of $2.5 billion, First Trust Morningstar Dividend Leaders Index Fund charges 45 bps in annual fees from investors and trades in a solid volume of about 910,000 shares a day. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
WisdomTree U.S. High Dividend Fund (DHS - Free Report) – Up 6.5%
WisdomTree U.S. High Dividend Fund offers exposure to U.S. equity from high dividend-yielding companies by tracking the WisdomTree U.S. High Dividend Index. It holds 314 stocks in its basket, with key holdings in energy, healthcare, consumer staples, financials, and utilities that account for double-digit exposure each.
WisdomTree U.S. High Dividend Fund has amassed $1 billion in its asset base and trades in a solid volume of around 86,000 shares a day. It charges 8 bps in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook (read: 6 Dividend ETFs Up At Least 6% YTD & Yielding At Least 3%).
iShares Core High Dividend ETF (HDV - Free Report) - Up 5.9%
iShares Core High Dividend ETF offers exposure to 75 high-quality and high-dividend stocks. It tracks the Morningstar Dividend Yield Focus Index and is slightly concentrated on the top firms, with each making up for no more than 8.2% share.
iShares Core High Dividend ETF has AUM of $10.1 billion and trades in a solid volume of around 1.3 million shares a day. It charges 8 bps in fees per year and has a Zacks ETF Rank #3 with a Medium risk outlook.
Pacer Global Cash Cows Dividend ETF (GCOW - Free Report) – Up 5.3%
Pacer Global Cash Cows Dividend ETF attempts to provide a continuous stream of income and capital appreciation over time by screening for companies with a high free cash flow yield and a high dividend yield. It holds 101 stocks in its basket and charges 60 bps in fees per year from investors.
Pacer Global Cash Cows Dividend ETF has been able to manage $389.2 million in its asset base and trades in an average daily volume 164,000 shares.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) – Up 4.8%
Invesco S&P 500 High Dividend Low Volatility ETF offers exposure to 51 stocks traded on the S&P 500 Index that historically have provided high-dividend yields and low volatility. It follows the S&P 500 Low Volatility High Dividend Index. Invesco S&P 500 High Dividend Low Volatility ETF is widely spread across sectors, with utilities, consumer staples, healthcare and real estate receiving double-digit exposure each.
Invesco S&P 500 High Dividend Low Volatility ETF has amassed $3.8 billion and charges 30 bps in annual fees. The fund trades in an average daily volume of 2 million shares.