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JPMorgan Chase & Co. (JPM) - free report >>
Texas Instruments Incorporated (TXN) - free report >>
Microsoft Corporation (MSFT) - free report >>
UnitedHealth Group Incorporated (UNH) - free report >>
Exxon Mobil Corporation (XOM) - free report >>
Broadcom Inc. (AVGO) - free report >>
Vanguard Dividend Appreciation ETF (VIG) - free report >>
3 High-Quality Dividend ETFs for 2023
Investors poured billions of dollars into dividend paying stocks and ETFs last year as these companies usually weather market downturns better than others. They may grow their payouts and realize capital appreciation and can therefore provide some inflation protection over the long term.
For 2022, the S&P 500 companies paid a record $564.6 billion to shareholders, compared to $511.2 billion in 2021, according to S&P Global Indices. The index provider believes that 2023 appears set for another record payment.
There are two popular approaches to dividend investing—dividend growth stocks and high dividend stocks.
Dividend growers are usually high-quality companies with solid balance sheets and stable cash flows. These stocks handily outperformed high dividend payers for almost 15 years.
Last year, however, high dividend payers did better than dividend growers. They are typically in defensive sectors like utilities, real estate, and consumer staples. Many energy companies have also boosted their payouts in recent years, and they are among the top holdings in high dividend funds.
The most popular dividend ETF—Vanguard Dividend Appreciation ETF (VIG - Free Report) —holds companies that have that have a record of increasing dividends over time. UnitedHealth Group (UNH - Free Report) and Microsoft (MSFT - Free Report) are its top holdings.
The Schwab U.S. Dividend Equity ETF (SCHD - Free Report) invests in high dividend stocks, with fundamental strength and a 10-year history of paying dividends. Broadcom (AVGO - Free Report) and Texas Instruments (TXN - Free Report) are currently the top holdings in the ETF, which was one of the top asset gainers in 2022.
The iShares Core Dividend Growth ETF (DGRO - Free Report) holds companies with consistent dividend growth for at least five years and payout ratio no more than 75%. JPMorgan Chase (JPM - Free Report) and Exxon Mobil (XOM - Free Report) are among the top holdings.
To learn more, please watch the short video above.