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The hunt for dividend in the equity market is always steady irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains? And if investors are caught in the web of equity market uncertainty and global growth worries, the lure for dividend investing increases.
The first half of 2021 was upbeat for stocks. Among major indexes, small-cap ETF (IWM - Free Report) added 17% this year, the S&P 500 ETF (SPY - Free Report) was up 14%, the Dow Jones ETF DIA gained 12% and the Nasdaq ETF Invesco QQQ Trust (QQQ - Free Report) advanced about 13%. However, rising rate worries occasionally posed a threat to the market rally. Oil prices surged a lot to reflect the higher demand(read: Top ETF Stories of 1H of 2021).
The rollout of $1.9-trillion of COVID-19 stimulus package — including dolling out of $1,400-stimulus checks, the announcement of $2.3-trillion worth of infrastructure plan, joining of Paris Climate Change agreement in support for a green economy and a massive push for coronavirus vaccination — are some of the measures that helped stocks win.
No wonder, treasury yields rose this year and so did the demand for dividend ETFs as several investors wanted to earn a solid current income. Notably, the benchmark treasury yield started the year with 0.93% while it ended the first half with 1.45%.
How Did Dividend ETFs Fare in 1H?
Dividend payments were mostly stalled in the year 2020 as the coronavirus-led corporate cash crunch led to the announcement of dividend cuts. In April 2020, two dozen companies in the S&P 500 cut or suspended their dividends. However, things are changing this year. In April 2021, about 33 companies in the S&P 500 announced dividend hikes. No companies announced a cut or suspension, per a CNBC article (read: Dividend Hikes Are Back: Buy These ETFs).
Howard Silverblatt, senior index analyst from S&P Global Indices expects the overall dividend payout for the S&P 500 to increase 5% in 2021, per the CNBC article. That would take the total payout to about $515 billion, up from $483 billion in 2020. This makes it intriguing to bet on the dividend ETFs.
Investors should note that not all dividend stocks serve the same purpose. While the high-yield ones are known for offering hefty current income, stocks with dividend growth point to quality investing – a pre-requisite to making money in this volatile environment. These companies – known as dividend aristocrats – are usually good for value investing and are in demand when volatility flares up.
Against this backdrop, below we highlight a few dividend ETFs that were among the top-performers in the first half of 2021.
ETFs in Focus
VanEck Vectors Energy Income ETF (EINC - Free Report) ) – Up 37.6% YTD; Yields 4.34%
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) ) – Up 26.1% YTD; Yields 7.31%
First Trust Dorsey Wright Momentum & Dividend ETF (DDIV - Free Report) ) – Up 22.9% YTD; Yields 1.86%
Principal Value ETF (PY - Free Report) ) – Up 23.8% YTD; Yields 2.84%
SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) ) – Up 22.4% YTD; Yields 4.72%
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5 Market-Beating Dividend ETFs of 1H2021
The hunt for dividend in the equity market is always steady irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains? And if investors are caught in the web of equity market uncertainty and global growth worries, the lure for dividend investing increases.
The first half of 2021 was upbeat for stocks. Among major indexes, small-cap ETF (IWM - Free Report) added 17% this year, the S&P 500 ETF (SPY - Free Report) was up 14%, the Dow Jones ETF DIA gained 12% and the Nasdaq ETF Invesco QQQ Trust (QQQ - Free Report) advanced about 13%. However, rising rate worries occasionally posed a threat to the market rally. Oil prices surged a lot to reflect the higher demand(read: Top ETF Stories of 1H of 2021).
The rollout of $1.9-trillion of COVID-19 stimulus package — including dolling out of $1,400-stimulus checks, the announcement of $2.3-trillion worth of infrastructure plan, joining of Paris Climate Change agreement in support for a green economy and a massive push for coronavirus vaccination — are some of the measures that helped stocks win.
No wonder, treasury yields rose this year and so did the demand for dividend ETFs as several investors wanted to earn a solid current income. Notably, the benchmark treasury yield started the year with 0.93% while it ended the first half with 1.45%.
How Did Dividend ETFs Fare in 1H?
Dividend payments were mostly stalled in the year 2020 as the coronavirus-led corporate cash crunch led to the announcement of dividend cuts. In April 2020, two dozen companies in the S&P 500 cut or suspended their dividends. However, things are changing this year. In April 2021, about 33 companies in the S&P 500 announced dividend hikes. No companies announced a cut or suspension, per a CNBC article (read: Dividend Hikes Are Back: Buy These ETFs).
Howard Silverblatt, senior index analyst from S&P Global Indices expects the overall dividend payout for the S&P 500 to increase 5% in 2021, per the CNBC article. That would take the total payout to about $515 billion, up from $483 billion in 2020. This makes it intriguing to bet on the dividend ETFs.
Investors should note that not all dividend stocks serve the same purpose. While the high-yield ones are known for offering hefty current income, stocks with dividend growth point to quality investing – a pre-requisite to making money in this volatile environment. These companies – known as dividend aristocrats – are usually good for value investing and are in demand when volatility flares up.
Against this backdrop, below we highlight a few dividend ETFs that were among the top-performers in the first half of 2021.
ETFs in Focus
VanEck Vectors Energy Income ETF (EINC - Free Report) ) – Up 37.6% YTD; Yields 4.34%
Invesco KBW High Dividend Yield Financial ETF (KBWD - Free Report) ) – Up 26.1% YTD; Yields 7.31%
First Trust Dorsey Wright Momentum & Dividend ETF (DDIV - Free Report) ) – Up 22.9% YTD; Yields 1.86%
Principal Value ETF (PY - Free Report) ) – Up 23.8% YTD; Yields 2.84%
SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) ) – Up 22.4% YTD; Yields 4.72%
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 >>