The year 2022 as a whole could easily be attributed to the Russia-Ukraine war, red-hot inflation and rising-rate worries. No wonder, such worries caused an upheaval in the market this year. In Q1, Wall Street witnessed its worst performance in two years. The Dow Jones and the S&P 500 lost 4.6% and 4.9%, respectively, while the Nasdaq Composite Index shed 9% in the first quarter.

The downfall is showing no signs of abating. Heightened rising rate worries amid super-hawkish cues from the Fed has bummed out Wall Street in the ongoing the second quarter. Overall, the S&P 500 is down 16.3% this year (as of May 9, 2022). The Nasdaq Composite is off 25.7%, the Dow Jones has lost 11.3% while the Russell 2000 has skidded 21.5% year to date.

The long-term bond yields were suppressed in the first quarter due to the risk-off trade sentiments (instigated by the Russia-Ukraine war). But rates started rising from the second quarter. The benchmark treasury yield started the week ended May 6 with 2.99% and closed the week at 3.12%, hitting highest level since 2018.   

Against this backdrop, dividend ETFs acted as a great safety. Be it a bull or a bear market, investors mostly love dividend-paying stocks. After all, who doesn’t like a steady stream of current income along with capital appreciation?

Dividend-paying companies are usually good for value investing and are in demand when volatility flares up. Investors have two options in this field – one with steady dividend growth (or dividend aristocrats) and the other with high yield. Companies that raise dividend regularly appear steadier than those that offer higher yields. But then high-yielding ones also make up for the capital losses to a large-extent, if there is any.

Several dividend ETFs offered better returns than the S&P 500 this year. We expect the trend to stay strong in Q2. Against this backdrop, below we highlight a few dividend ETF winners of 2022 so far that have breezed past the S&P 500.

ETFs in Focus

Global Beta Smart Income ETF – Up 8.3% YTD; Yield 3.51%

The underlying Global Beta Smart Income Index comprises of equity securities of U.S. companies in the highest quintile of the average twelve month trailing dividend yield over each of the prior four quarters in the S&P 900, and that rank in the top half of their respective GICS sector classification.

WisdomTree US High Dividend Fund (DHS Quick QuoteDHS - Free Report) – Up 7.3% YTD; Yield 3.79%

The underlying WisdomTree U.S. High Dividend Index is a fundamentally weighted index that measures the performance of companies with high dividend yields selected from the WisdomTree Dividend Index. The fund charges 38 bps in fees.

First Trust Morningstar Dividend Leaders Index Fund FDL – Up 6.8% YTD; Yield 3.58%

The underlying Morningstar Dividend Leaders Index of FDL consists of stocks that have shown dividend consistency and dividend sustainability.

Pacer Global Cash Cows Dividend ETF (GCOW Quick QuoteGCOW - Free Report) – Up 6.7% YTD; Yield 4.38%

The underlying Pacer Global Cash Cows Dividend Index uses an objective, rules-based methodology to provide exposure to global companies with high dividend yields backed by a high free cash flow yield. The fund charges 60 bps in fees.

Invesco S&P 500 High Dividend Low Volatility ETF (SPHD Quick QuoteSPHD - Free Report) – Up 6.3% YTD; Yield 3.65%

The fund is a winning combination of high dividend and low volatility – the need of the hour. The S&P 500 Low Volatility High Dividend Index comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.

iShares Core High Dividend ETF (HDV Quick QuoteHDV - Free Report) – Up 6%; Yield 3.41%

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 charges 8 bps in fees.