We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Dividend ETFs to Invest as Odds for October Fed Rate Cut High
Read MoreHide Full Article
The Fed is meeting at the end of the month. The central bank slashed rates twice this year by 25 bps each. With some key economic data looking bleak, several market watchers are betting big on a rate cut in the upcoming meeting. At the current level, according to CME FedWatch tool, there is a 93% chance of a 25-bp rate cut in this meeting, up from 49.2% chance noted a month ago.
The bets over lower rates increased a bit in recent trading as U.S. GDP growth is expected to have slowed in the third quarter hurt by softer manufacturing and retail sales data. The Atlanta Fed’s GDPNow model estimates the U.S. economy expanded 1.8% in the third quarter, down from the second quarter’s growth of 2%. Goldman Sachs also reduced its outlook for Q3 GDP in recent times and quoted the expected figure at 1.7% (read: S&P 500 ETFs & Stocks to Buy on a Likely Great Rotation).
The IMF also slashed its global growth projections lately, calling for 3% and 3.4% expansion in 2019 and 2020, respectively. Projections were cut from the previous levels of 3.2% and 3.5% recorded in July. The forecast for this year would mark the lowest growth rate since 2009. Such low growth rates demand easy money polices globally.
Why to Buy Dividend ETFs?
The accommodative Fed should do good for stocks as there will be more months of cheap money inflows. Among stocks, income-producing securities might do even better for investors in search of solid and steady current income. The past decade was especially favorable for dividend ETFs as central banks including the Fed has been ultra-dovish. Research shows that dividend stocks often beat their non-dividend paying counterparts over longer periods.
Against this backdrop, below we highlight a few ETFs that are to register an outperformance.
The underlying Morningstar Dividend Yield Focus Index offers exposure to high quality U.S. domiciled companies that have had strong financial health and an ability to sustain above average dividend payouts . The fund yields 3.33% annually (read: 5 Amazing ETF Strategies for the Fourth Quarter).
The underlying FTSE US Qual / Vol / Yield Factor 5% Capped Index measures the performance of publicly-listed, large-capitalization and mid-capitalization dividend-paying issuers in the United States. The fund yields 2.47% annually.
The underlying FTSE High Dividend Yield Index, which is consists of common stocks of companies that pay out dividends that generally are higher than average. The fund yields about 3.13% annually.
The underlying INDXX SuperDividend US 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. It yields 7.42% annually.
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 >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Dividend ETFs to Invest as Odds for October Fed Rate Cut High
The Fed is meeting at the end of the month. The central bank slashed rates twice this year by 25 bps each. With some key economic data looking bleak, several market watchers are betting big on a rate cut in the upcoming meeting. At the current level, according to CME FedWatch tool, there is a 93% chance of a 25-bp rate cut in this meeting, up from 49.2% chance noted a month ago.
The bets over lower rates increased a bit in recent trading as U.S. GDP growth is expected to have slowed in the third quarter hurt by softer manufacturing and retail sales data. The Atlanta Fed’s GDPNow model estimates the U.S. economy expanded 1.8% in the third quarter, down from the second quarter’s growth of 2%. Goldman Sachs also reduced its outlook for Q3 GDP in recent times and quoted the expected figure at 1.7% (read: S&P 500 ETFs & Stocks to Buy on a Likely Great Rotation).
The IMF also slashed its global growth projections lately, calling for 3% and 3.4% expansion in 2019 and 2020, respectively. Projections were cut from the previous levels of 3.2% and 3.5% recorded in July. The forecast for this year would mark the lowest growth rate since 2009. Such low growth rates demand easy money polices globally.
Why to Buy Dividend ETFs?
The accommodative Fed should do good for stocks as there will be more months of cheap money inflows. Among stocks, income-producing securities might do even better for investors in search of solid and steady current income. The past decade was especially favorable for dividend ETFs as central banks including the Fed has been ultra-dovish. Research shows that dividend stocks often beat their non-dividend paying counterparts over longer periods.
Against this backdrop, below we highlight a few ETFs that are to register an outperformance.
iShares Core High Dividend ETF (HDV - Free Report)
The underlying Morningstar Dividend Yield Focus Index offers exposure to high quality U.S. domiciled companies that have had strong financial health and an ability to sustain above average dividend payouts . The fund yields 3.33% annually (read: 5 Amazing ETF Strategies for the Fourth Quarter).
O'Shares FTSE US Quality Dividend ETF (OUSA - Free Report)
The underlying FTSE US Qual / Vol / Yield Factor 5% Capped Index measures the performance of publicly-listed, large-capitalization and mid-capitalization dividend-paying issuers in the United States. The fund yields 2.47% annually.
Vanguard High Dividend Yield ETF (VYM - Free Report)
The underlying FTSE High Dividend Yield Index, which is consists of common stocks of companies that pay out dividends that generally are higher than average. The fund yields about 3.13% annually.
Global X SuperDividend U.S. ETF (DIV - Free Report)
The underlying INDXX SuperDividend US 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. It yields 7.42% annually.
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 >>