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5 ETFs to Tap to Earn At Least 4% Yield & Capital Gains
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Rising rates started bothering both equity and bond markets from February-end. Growing vaccine distribution and a hefty stimulus launch under the Biden presidency along with a dovish Fed stoked inflationary pressure and boosted long-term treasury yields.
The trend has strengthened all the more after the latest Fed meeting. This is because the Fed’s PCE inflation expectation has gone up to 2.4% for 2021 from 1.8% projected in December, to 2.0% for 2022 (from 1.9%) and 2.1% for 2023 (from 2.0%). The Fed also upgraded its forecast for 2021 GDP growth from 4.2% in December to 6.5% and beefed up the 2022 growth forecast from 3.2% to 3.3%.
No wonder, the U.S. benchmark treasury yield hit 1.71% on Mar 18, 2021, whichwas at 1.09% at the start of February. This has certainly left an impact across the asset classes, causing occasional bond and stock market (especially the growth stocks) rout.
Why to Pick High-Dividend Securities
As economies are likely to rebound ahead and inflation rates may pace up, bond yields should soar. In such a scenario, investors may be interested in equities that have the potential to offer capital appreciation as well as benchmark-beating yields. After all, dividends are one of the ways to ride out the turbulent times.
Even if stocks or funds fall, higher current income would go a long way in protecting investors’ total returns. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.
We thus have zeroed in on some high-dividend ETFs.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) ) – Yield 7.51%; Up 20.4% This Year
The underlying KBW Nasdaq Financial Sector Dividend Yield Index is a dividend-yield-weighted index seeking to reflect the performance of approximately 24 to 40 publicly listed financial companies engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the United States. The expense ratio of the fund 1.24%.
SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) ) – Yield 4.12%; Up 19.13% This Year
The underlying S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield. The fund charges 7 bps in fees.
Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report) ) – Yield 4.08%; Up 20.3% This Year
The underlying S&P 900 Dividend Revenue-Weighted Index is constructed using a rules-based methodology that starts with the S&P 900 Index, subject to a maximum 5% per company weighting. The fund charges 39 bps in fees (read: ETFs in Focus Post Mixed IBM Q4 Earnings).
First Trust Dow Jones Global Select Dividend Index (FGD - Free Report) ) – Yield 5.33%; Up 15.7% This Year
The underlying Dow Jones Global Select Dividend Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. The fund charges 59 bps in fees.
Global X SuperDividend U.S. ETF (DIV - Free Report) ) – Yield 6.40%; Up 14.1% This Year
The underlying INDXX SuperDividend U.S. 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. The fund charges 46 bps in fees.
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5 ETFs to Tap to Earn At Least 4% Yield & Capital Gains
Rising rates started bothering both equity and bond markets from February-end. Growing vaccine distribution and a hefty stimulus launch under the Biden presidency along with a dovish Fed stoked inflationary pressure and boosted long-term treasury yields.
The trend has strengthened all the more after the latest Fed meeting. This is because the Fed’s PCE inflation expectation has gone up to 2.4% for 2021 from 1.8% projected in December, to 2.0% for 2022 (from 1.9%) and 2.1% for 2023 (from 2.0%). The Fed also upgraded its forecast for 2021 GDP growth from 4.2% in December to 6.5% and beefed up the 2022 growth forecast from 3.2% to 3.3%.
No wonder, the U.S. benchmark treasury yield hit 1.71% on Mar 18, 2021, whichwas at 1.09% at the start of February. This has certainly left an impact across the asset classes, causing occasional bond and stock market (especially the growth stocks) rout.
Why to Pick High-Dividend Securities
As economies are likely to rebound ahead and inflation rates may pace up, bond yields should soar. In such a scenario, investors may be interested in equities that have the potential to offer capital appreciation as well as benchmark-beating yields. After all, dividends are one of the ways to ride out the turbulent times.
Even if stocks or funds fall, higher current income would go a long way in protecting investors’ total returns. After all, high-dividend ETFs provide investors avenues to make up for capital losses, if that happens at all.
We thus have zeroed in on some high-dividend ETFs.
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) ) – Yield 7.51%; Up 20.4% This Year
The underlying KBW Nasdaq Financial Sector Dividend Yield Index is a dividend-yield-weighted index seeking to reflect the performance of approximately 24 to 40 publicly listed financial companies engaged in the business of providing financial services and products, including banking, insurance and diversified financial services, in the United States. The expense ratio of the fund 1.24%.
SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) ) – Yield 4.12%; Up 19.13% This Year
The underlying S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield. The fund charges 7 bps in fees.
Invesco S&P Ultra Dividend Revenue ETF (RDIV - Free Report) ) – Yield 4.08%; Up 20.3% This Year
The underlying S&P 900 Dividend Revenue-Weighted Index is constructed using a rules-based methodology that starts with the S&P 900 Index, subject to a maximum 5% per company weighting. The fund charges 39 bps in fees (read: ETFs in Focus Post Mixed IBM Q4 Earnings).
First Trust Dow Jones Global Select Dividend Index (FGD - Free Report) ) – Yield 5.33%; Up 15.7% This Year
The underlying Dow Jones Global Select Dividend Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. The fund charges 59 bps in fees.
Global X SuperDividend U.S. ETF (DIV - Free Report) ) – Yield 6.40%; Up 14.1% This Year
The underlying INDXX SuperDividend U.S. 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. The fund charges 46 bps in fees.
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 >>