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Tackle Market Uncertainty With These 3 Quality Dividend ETFs
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U.S. equity markets are going through a rough patch. There is a lot of uncertainty around trade negotiations and recent concerns around Facebook’s data breach are weighing on the tech sector. This has increased the appeal of dividend investing (read: Stocks and ETFs with Juicy Dividend Yields).
What’s Bothering the Markets?
Tech’s Freefall
A day after recording massive gains on talks of negotiations between China and the United States relating to trade, the markets suffered huge losses led by tech stocks. The Dow Jones industrial average fell 1.4%. Moreover, Standard & Poor's 500 fell 1.7% and the technology heavy Nasdaq slid 2.9%, as investors flocked to safety.
Social media companies were the major losers, as the recent data debacle introduced fresh concerns around the activities of sector participants. Twitter Inc slumped 12% at the end of trading on Mar 27, as Citron Research said it is shorting the stock owing to the company’s reliance on licensing user data. Moreover, Facebook slumped a further 4.9% as Mark Zuckerberg prepares to testify in front of Congress.
Facebook has been falling, following a report that data mining firm Cambridge Analytica, the firm that worked for President Trump’s campaign, unethically obtained data from around 50 million Facebook users without their permission.
"While this will not be a pleasant experience for Zuckerberg and his team going in front of Congress, it is a necessary smart strategic step for Facebook to head to the Beltway as the public fury continues to grow around the Cambridge data leak," per a CNBC article citing Daniel Ives, head of technology research at GBH Insights.
Trade Uncertainty and Geopolitics
Although tensions between Washington and Beijing are easing, with signs of negotiations between China and the United States relating to trade, it will be naive to sit back, relax and hope that the negotiations won’t have a major impact on the global financial markets. Owing to the recent volatility in the markets, allocating a portion of your portfolio to safe dividend funds seems like an appealing option (read: ETFs to Buy as Trade War Fears Abate).
Moreover, investors expect the United States to withdraw from the Iran nuclear deal, after John Bolton was appointed as national security adviser. This could bring back sanctions on Iran and weigh on its capability to export crude oil to the market. As a result, rising geopolitical risks might increase the appeal of dividend investing.
In such a scenario, dividend-paying securities provide consistent income to investors. The uniqueness of these securities is their increased returns when political uncertainty weighs on markets, more so because apart from high dividend, these securities exhibit less volatility as they are stable and mature companies.
Let us now discuss a few ETFs focused on providing exposure to U.S. equities with relatively high dividend yields.
FlexShares Quality Dividend Index Fund (QDF - Free Report)
This fund seeks to provide exposure to U.S. companies providing high dividends, while maintaining a quality factor and utilizing constraints to minimize risk.
It has AUM of $1.8 billion and charges a fee of 37 basis points a year. From a sector look, the fund has high exposure to Information Technology, Financials and Industrials with 20.7%, 13.6% and 11.1% allocation, respectively. The fund’s top three holdings are Boeing Co (BA - Free Report) , Pfizer Inc (PFE - Free Report) and Apple Inc (AAPL - Free Report) with 3.5%, 3.3% and 3.1% allocation, respectively. The fund has returned 9.6% in a year but has lost 4.1% year to date. It has a dividend yield of 2.66%.
WisdomTree U.S. Quality Dividend Growth Fund (DGRW - Free Report)
This fund seeks to provide exposure to large, established U.S. companies providing high dividends by applying quality screens.
It has AUM of $2.0 billion and charges a fee of 28 basis points a year. From a sector look, the fund has high exposure to Information Technology, Industrials and Health Care with 21.1%, 18.6% and 17% allocation, respectively. The fund’s top three holdings are Exxon Mobil Corp (XOM - Free Report) , Johnson & Johnson (JNJ - Free Report) and Microsoft Corporation (MSFT - Free Report) with 5%, 4.6% and 4.2% allocation, respectively. The fund has returned 15% in a year but has lost 3.4% year to date. It has a dividend yield of 1.86%.
This fund seeks to provide cheap exposure to U.S. companies providing high dividends.
It has AUM of $7.1 billion and charges a fee of 7 basis points a year. From a sector look, the fund has high exposure to Consumer Staples, Information Technology and Industrials with 21.9%, 21.7% and 15.1% allocation, respectively. The fund’s top three holdings are Intel Corp (INTC - Free Report) , Exxon Mobil Corp and Procter and Gamble (PG - Free Report) with 4.6% allocation each. The fund has returned 11.7% in a year but has lost 5.2% year to date. It has a dividend yield of 3.30%. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
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Tackle Market Uncertainty With These 3 Quality Dividend ETFs
U.S. equity markets are going through a rough patch. There is a lot of uncertainty around trade negotiations and recent concerns around Facebook’s data breach are weighing on the tech sector. This has increased the appeal of dividend investing (read: Stocks and ETFs with Juicy Dividend Yields).
What’s Bothering the Markets?
Tech’s Freefall
A day after recording massive gains on talks of negotiations between China and the United States relating to trade, the markets suffered huge losses led by tech stocks. The Dow Jones industrial average fell 1.4%. Moreover, Standard & Poor's 500 fell 1.7% and the technology heavy Nasdaq slid 2.9%, as investors flocked to safety.
Social media companies were the major losers, as the recent data debacle introduced fresh concerns around the activities of sector participants. Twitter Inc slumped 12% at the end of trading on Mar 27, as Citron Research said it is shorting the stock owing to the company’s reliance on licensing user data. Moreover, Facebook slumped a further 4.9% as Mark Zuckerberg prepares to testify in front of Congress.
Facebook has been falling, following a report that data mining firm Cambridge Analytica, the firm that worked for President Trump’s campaign, unethically obtained data from around 50 million Facebook users without their permission.
"While this will not be a pleasant experience for Zuckerberg and his team going in front of Congress, it is a necessary smart strategic step for Facebook to head to the Beltway as the public fury continues to grow around the Cambridge data leak," per a CNBC article citing Daniel Ives, head of technology research at GBH Insights.
Trade Uncertainty and Geopolitics
Although tensions between Washington and Beijing are easing, with signs of negotiations between China and the United States relating to trade, it will be naive to sit back, relax and hope that the negotiations won’t have a major impact on the global financial markets. Owing to the recent volatility in the markets, allocating a portion of your portfolio to safe dividend funds seems like an appealing option (read: ETFs to Buy as Trade War Fears Abate).
Moreover, investors expect the United States to withdraw from the Iran nuclear deal, after John Bolton was appointed as national security adviser. This could bring back sanctions on Iran and weigh on its capability to export crude oil to the market. As a result, rising geopolitical risks might increase the appeal of dividend investing.
In such a scenario, dividend-paying securities provide consistent income to investors. The uniqueness of these securities is their increased returns when political uncertainty weighs on markets, more so because apart from high dividend, these securities exhibit less volatility as they are stable and mature companies.
Let us now discuss a few ETFs focused on providing exposure to U.S. equities with relatively high dividend yields.
FlexShares Quality Dividend Index Fund (QDF - Free Report)
This fund seeks to provide exposure to U.S. companies providing high dividends, while maintaining a quality factor and utilizing constraints to minimize risk.
It has AUM of $1.8 billion and charges a fee of 37 basis points a year. From a sector look, the fund has high exposure to Information Technology, Financials and Industrials with 20.7%, 13.6% and 11.1% allocation, respectively. The fund’s top three holdings are Boeing Co (BA - Free Report) , Pfizer Inc (PFE - Free Report) and Apple Inc (AAPL - Free Report) with 3.5%, 3.3% and 3.1% allocation, respectively. The fund has returned 9.6% in a year but has lost 4.1% year to date. It has a dividend yield of 2.66%.
WisdomTree U.S. Quality Dividend Growth Fund (DGRW - Free Report)
This fund seeks to provide exposure to large, established U.S. companies providing high dividends by applying quality screens.
It has AUM of $2.0 billion and charges a fee of 28 basis points a year. From a sector look, the fund has high exposure to Information Technology, Industrials and Health Care with 21.1%, 18.6% and 17% allocation, respectively. The fund’s top three holdings are Exxon Mobil Corp (XOM - Free Report) , Johnson & Johnson (JNJ - Free Report) and Microsoft Corporation (MSFT - Free Report) with 5%, 4.6% and 4.2% allocation, respectively. The fund has returned 15% in a year but has lost 3.4% year to date. It has a dividend yield of 1.86%.
Schwab U.S. Dividend Equity ETF SCHD
This fund seeks to provide cheap exposure to U.S. companies providing high dividends.
It has AUM of $7.1 billion and charges a fee of 7 basis points a year. From a sector look, the fund has high exposure to Consumer Staples, Information Technology and Industrials with 21.9%, 21.7% and 15.1% allocation, respectively. The fund’s top three holdings are Intel Corp (INTC - Free Report) , Exxon Mobil Corp and Procter and Gamble (PG - Free Report) with 4.6% allocation each. The fund has returned 11.7% in a year but has lost 5.2% year to date. It has a dividend yield of 3.30%. It has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>