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Amid market volatility and lower rate environment, investors are seeking consistent and safe income, thereby driving the appeal for dividend investing. The second wave of coronavirus cases and rising U.S.-China tensions has made investors jittery.
An unexpected spike in U.S. jobless claims in mid-July for the first time in four months also added to the chaos. Additionally, U.S. consumer confidence tumbled more than expected in July due to a flare-up in COVID-19 infections across the country. However, more stimuli and a dovish signal from the Federal Reserve to revive a battered domestic economy are expected to fuel growth in the economy (read: 4 ETF Zones Making the Most of a Weakening Dollar).
In such a scenario, dividend-focused products offer both safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices. The 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. Further, these products are proven outperformers over the long term.
Investing in the high-yield products in this corner could earn higher returns amid turbulent times. As such, we have presented six ETFs that yield more than 5% in dividends and could be interesting plays should the same trends persist. These funds offer broad exposure to a number of sectors.
Global X SuperDividend ETF (SDIV - Free Report) – Annual Yield: 11.41%
This ETF provides exposure to the 101 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. About 28.1% of the portfolio is allocated to United States while Australia rounds off the next spot with 10.9% share. The product has amassed $643.6 million in its asset base and sees good trading volume of about 413,000 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.
Global X SuperDividend Alternatives ETF (ALTY - Free Report) – Annual Yield: 10.84%
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 the Indxx SuperDividend Alternatives Index, holding 45 stocks in the basket. The product has accumulated $17 million in its asset base and charges 2.95% in annual fees. It trades in a paltry volume of 14,000 shares a day on average (read: 3 Top Sector ETFs to Start Q3 With More Room for Growth).
Global X SuperDividend U.S. ETF (DIV - Free Report) – Annual Yield: 10.94%
This fund provides exposure to 45 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. The product has amassed $414.7 million in its asset base while trading in good volume of about 244,000 shares. It charges 46 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: 6.85%
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 96 stocks in its basket and has amassed $378 million in its asset base. The ETF charges 59 bps in annual fees from investors. Volume is moderate trading in average daily volumes of 98,000 shares. The fund has a Zacks ETF Rank #3 with a Low risk outlook.
WBI Power Factor High Dividend ETF (WBIY - Free Report) – Annual Yield: 6.08%
This ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket. The product has amassed $42.1 million in its asset base and charges 70 bps in annual fees. It trades in a lower volume of 8,000 shares a day on average (read: S&P 500 Turns Positive for 2020: 10 Top Stocks in ETF).
This fund provides exposure to stocks with a high level of dividend income and the opportunity for capital appreciation by tracking the S&P 500 High Dividend Index. Holding 61 stocks in its basket, the fund is well diversified across securities with each making up for less than 2.5% of assets. It has AUM of $1.9 billion and trades in volume of about 1.7 million shares. It charges 7 bps in annual fees and has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook.
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High-Yield Dividend ETFs in Focus
Amid market volatility and lower rate environment, investors are seeking consistent and safe income, thereby driving the appeal for dividend investing. The second wave of coronavirus cases and rising U.S.-China tensions has made investors jittery.
An unexpected spike in U.S. jobless claims in mid-July for the first time in four months also added to the chaos. Additionally, U.S. consumer confidence tumbled more than expected in July due to a flare-up in COVID-19 infections across the country. However, more stimuli and a dovish signal from the Federal Reserve to revive a battered domestic economy are expected to fuel growth in the economy (read: 4 ETF Zones Making the Most of a Weakening Dollar).
In such a scenario, dividend-focused products offer both safety in the form of payouts and stability in the form of mature companies that are less volatile to the large swings in stock prices. The 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. Further, these products are proven outperformers over the long term.
Investing in the high-yield products in this corner could earn higher returns amid turbulent times. As such, we have presented six ETFs that yield more than 5% in dividends and could be interesting plays should the same trends persist. These funds offer broad exposure to a number of sectors.
Global X SuperDividend ETF (SDIV - Free Report) – Annual Yield: 11.41%
This ETF provides exposure to the 101 highest-dividend-paying equities around the world by tracking the Solactive Global SuperDividend Index. About 28.1% of the portfolio is allocated to United States while Australia rounds off the next spot with 10.9% share. The product has amassed $643.6 million in its asset base and sees good trading volume of about 413,000 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.
Global X SuperDividend Alternatives ETF (ALTY - Free Report) – Annual Yield: 10.84%
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 the Indxx SuperDividend Alternatives Index, holding 45 stocks in the basket. The product has accumulated $17 million in its asset base and charges 2.95% in annual fees. It trades in a paltry volume of 14,000 shares a day on average (read: 3 Top Sector ETFs to Start Q3 With More Room for Growth).
Global X SuperDividend U.S. ETF (DIV - Free Report) – Annual Yield: 10.94%
This fund provides exposure to 45 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. The product has amassed $414.7 million in its asset base while trading in good volume of about 244,000 shares. It charges 46 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: 6.85%
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 96 stocks in its basket and has amassed $378 million in its asset base. The ETF charges 59 bps in annual fees from investors. Volume is moderate trading in average daily volumes of 98,000 shares. The fund has a Zacks ETF Rank #3 with a Low risk outlook.
WBI Power Factor High Dividend ETF (WBIY - Free Report) – Annual Yield: 6.08%
This ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket. The product has amassed $42.1 million in its asset base and charges 70 bps in annual fees. It trades in a lower volume of 8,000 shares a day on average (read: S&P 500 Turns Positive for 2020: 10 Top Stocks in ETF).
SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) – Annual Yield: 6.01%
This fund provides exposure to stocks with a high level of dividend income and the opportunity for capital appreciation by tracking the S&P 500 High Dividend Index. Holding 61 stocks in its basket, the fund is well diversified across securities with each making up for less than 2.5% of assets. It has AUM of $1.9 billion and trades in volume of about 1.7 million shares. It charges 7 bps in annual fees and has a Zacks ETF Rank of #2 (Buy) 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 >>