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High Yield Dividend ETFs & Stocks to Buy as Fed Cuts Rate
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The Federal Reserve cut interest rates by half-percentage point to the range of 1.00-1.25% to protect the longest ever economic expansion from the rapidly spreading coronavirus. This represents the first emergency rate cut and the biggest one-time cut since 2008 (read: Fed Might Cut Rates in March: Sector ETFs, Stocks to Buy).
The deadly virus originated in Wuhan, China late last year and has now spread outside China. Per the latest study, there were 91,313 cases and 3,118 deaths worldwide. The spread of the disease has led to fears of pandemic, leading to bloodbath in the stock market. Notably, the S&P 500 registered the fastest market correction in the history with six consecutive days of fall from its peak on Feb 19 and has lost about $3.6 trillion in value since then.
Amid the market turmoil and low interest rates environment, investors are in search of juicy yields. And nothing is better than the high-yield dividend ETFs.
Inside Dividend Investing
Dividend paying securities are major sources of consistent income for investors, creating wealth when returns from the equity market are at risk. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
Investing in the high yield products in this corner could earn higher returns amid turbulent times. As such, we have presented five ETFs & stocks that yield more than 5% in dividends and could be interesting plays given the same trends persist (read: Guide to 10 Most Popular Dividend ETFs).
ETF Picks
We have highlighted ETFs that offer broad exposure to a number of sectors with a dividend yield of more than 5% and AUM of above $50 million.
Global X SuperDividend ETF (SDIV - Free Report) – Annual Yield: 9.8%
This ETF provides exposure to 145 highest dividend paying equities around the world by tracking the Solactive Global SuperDividend Index. About 41.1% of the portfolio is allocated to United States while Australia rounds off the next spot with 14.6% share. The product has amassed $866.4 million in its asset base and sees good trading volume of about 379,000 shares a day on average. Its expense ratio is 0.59%. The fund has a Zacks ETF Rank #3 (Hold) with a Low risk outlook (read: 5 ETFs Under $20 Up for Gains in 2020).
Global X SuperDividend Alternatives ETF (ALTY - Free Report) – Annual Yield: 9.5%
This ETF offers exposure to a variety of alternative income-generating categories, including real estate, master limited partnerships (MLPs) and infrastructure, institutional managers, and fixed income and derivative strategies. It follows Indxx SuperDividend Alternatives Index, holding 46 stocks in the basket. The product has accumulated $23.6 million in its asset base and charges 3.48% in annual fees. It trades in a paltry volume of 16,000 shares a day on average.
Global X SuperDividend U.S. ETF (DIV - Free Report) – Annual Yield: 8.7%
This fund provides exposure to 50 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. The product has amassed $550.5 million in its asset base while trading in good volume of about 184,000 shares. It charges 46 basis points (bps) in fees per year from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
First Trust Dow Jones Global Select Dividend Index (FGD - Free Report) – Annual Yield: 5.8%
This ETF tracks the Dow Jones Global Select Dividend Index, which is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. It holds 98 stocks in its basket and has amassed $570 million in its asset base, The ETF charges 58 bps in annual fees from investors. Volume is moderate trading in average daily volumes of 110,000 shares. The fund has a Zacks ETF Rank #3 with a Low risk outlook.
This fund 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 100 stocks in its basket and charges 60 bps in fees per year from investors. The ETF has AUM of $185.8 million and trades in average daily volume 30,000 shares.
Stock Picks
We have chosen five top picks using the Zacks Stock Screener that fits our criteria — a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Score of A or B. Our chosen stocks are:
Prudential Public Limited Company (PUK - Free Report) – Annual Yield: 31.2%
This company provides retail financial products and services and fund management to many millions of customers worldwide. It has a Zacks Rank #2 and a market capitalization of $43.4 billion (read: 5 Top-Ranked Sector ETFs to Buy at Bargain Price).
It is a provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts and circulars, direct mail products, books and directories. The stock has a Zacks Rank #2 and a market capitalization of $242.3 million.
Macy's Inc. (M - Free Report) – Annual Yield: 11.6%
This omnichannel retail organization operates stores, websites, and mobile applications. It sells a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The stock has a Zacks Rank #1 and a market capitalization of $4 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.
It provides diversified investment management services, primarily to pension funds, endowments, foreign financial institutions, and to individual investors. AllianceBernstein has a Zacks Rank #1 and a market capitalization of $3.2 billion.
This MLP is engaged in the transportation and storage of crude oil as well as refined products in the United States, the Netherlands Antilles, Canada, Mexico, and the U.K. The stock has a Zacks Rank #2 and a market capitalization of $2.5 billion (read: 5 Energy ETFs & Stocks That Gained From Rebound in Oil Price).
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High Yield Dividend ETFs & Stocks to Buy as Fed Cuts Rate
The Federal Reserve cut interest rates by half-percentage point to the range of 1.00-1.25% to protect the longest ever economic expansion from the rapidly spreading coronavirus. This represents the first emergency rate cut and the biggest one-time cut since 2008 (read: Fed Might Cut Rates in March: Sector ETFs, Stocks to Buy).
The deadly virus originated in Wuhan, China late last year and has now spread outside China. Per the latest study, there were 91,313 cases and 3,118 deaths worldwide. The spread of the disease has led to fears of pandemic, leading to bloodbath in the stock market. Notably, the S&P 500 registered the fastest market correction in the history with six consecutive days of fall from its peak on Feb 19 and has lost about $3.6 trillion in value since then.
Amid the market turmoil and low interest rates environment, investors are in search of juicy yields. And nothing is better than the high-yield dividend ETFs.
Inside Dividend Investing
Dividend paying securities are major sources of consistent income for investors, creating wealth when returns from the equity market are at risk. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.
Investing in the high yield products in this corner could earn higher returns amid turbulent times. As such, we have presented five ETFs & stocks that yield more than 5% in dividends and could be interesting plays given the same trends persist (read: Guide to 10 Most Popular Dividend ETFs).
ETF Picks
We have highlighted ETFs that offer broad exposure to a number of sectors with a dividend yield of more than 5% and AUM of above $50 million.
Global X SuperDividend ETF (SDIV - Free Report) – Annual Yield: 9.8%
This ETF provides exposure to 145 highest dividend paying equities around the world by tracking the Solactive Global SuperDividend Index. About 41.1% of the portfolio is allocated to United States while Australia rounds off the next spot with 14.6% share. The product has amassed $866.4 million in its asset base and sees good trading volume of about 379,000 shares a day on average. Its expense ratio is 0.59%. The fund has a Zacks ETF Rank #3 (Hold) with a Low risk outlook (read: 5 ETFs Under $20 Up for Gains in 2020).
Global X SuperDividend Alternatives ETF (ALTY - Free Report) – Annual Yield: 9.5%
This ETF offers exposure to a variety of alternative income-generating categories, including real estate, master limited partnerships (MLPs) and infrastructure, institutional managers, and fixed income and derivative strategies. It follows Indxx SuperDividend Alternatives Index, holding 46 stocks in the basket. The product has accumulated $23.6 million in its asset base and charges 3.48% in annual fees. It trades in a paltry volume of 16,000 shares a day on average.
Global X SuperDividend U.S. ETF (DIV - Free Report) – Annual Yield: 8.7%
This fund provides exposure to 50 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. The product has amassed $550.5 million in its asset base while trading in good volume of about 184,000 shares. It charges 46 basis points (bps) in fees per year from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.
First Trust Dow Jones Global Select Dividend Index (FGD - Free Report) – Annual Yield: 5.8%
This ETF tracks the Dow Jones Global Select Dividend Index, which is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. It holds 98 stocks in its basket and has amassed $570 million in its asset base, The ETF charges 58 bps in annual fees from investors. Volume is moderate trading in average daily volumes of 110,000 shares. The fund has a Zacks ETF Rank #3 with a Low risk outlook.
Pacer Global Cash Cows Dividend ETF (GCOW - Free Report) - Annual Yield: 5.1%
This fund 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 100 stocks in its basket and charges 60 bps in fees per year from investors. The ETF has AUM of $185.8 million and trades in average daily volume 30,000 shares.
Stock Picks
We have chosen five top picks using the Zacks Stock Screener that fits our criteria — a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Score of A or B. Our chosen stocks are:
Prudential Public Limited Company (PUK - Free Report) – Annual Yield: 31.2%
This company provides retail financial products and services and fund management to many millions of customers worldwide. It has a Zacks Rank #2 and a market capitalization of $43.4 billion (read: 5 Top-Ranked Sector ETFs to Buy at Bargain Price).
Quad Graphics Inc (QUAD - Free Report) - Annual Yield: 13.4%
It is a provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts and circulars, direct mail products, books and directories. The stock has a Zacks Rank #2 and a market capitalization of $242.3 million.
Macy's Inc. (M - Free Report) – Annual Yield: 11.6%
This omnichannel retail organization operates stores, websites, and mobile applications. It sells a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The stock has a Zacks Rank #1 and a market capitalization of $4 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.
AllianceBernstein Holding L.P. (AB - Free Report) – Annual Yield: 10.4%
It provides diversified investment management services, primarily to pension funds, endowments, foreign financial institutions, and to individual investors. AllianceBernstein has a Zacks Rank #1 and a market capitalization of $3.2 billion.
NuStar Energy L.P. (NS - Free Report) – Annual Yield: 10.3%
This MLP is engaged in the transportation and storage of crude oil as well as refined products in the United States, the Netherlands Antilles, Canada, Mexico, and the U.K. The stock has a Zacks Rank #2 and a market capitalization of $2.5 billion (read: 5 Energy ETFs & Stocks That Gained From Rebound in Oil Price).
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 >>