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While the stock market has recorded an incredible rally in 2023, exceeding all expectations, there are valid reasons to approach the current situation with caution. The excitement for AI, global growth slowdown and still-present inflationary pressure indicate potential bubbles.
In individual corporate news, transportation, e-commerce and business services company FedEx (FDX - Free Report) shares tumbled more than 10% after the delivery company missed quarterly profit expectations. It also cut its full-year revenue forecast amid a drop in U.S. Postal Service demand. This strengthens the fear of economic growth slowdown.
Against this backdrop, below we highlight a few dividend ETF winners of 2023. This is especially true given the dividend-focused products offer safety through payouts and stability in the form of mature companies that are less volatile amid large swings in stock prices.
Both Dividend Growth & High Dividends Were Winners
High-dividend ETFs as well as dividend aristocrats were winners in 2023. Divined stocks normally underperform in a rising rate environment. Dividend fund iShares Select Dividend ETF (DVY) is off 4.4% this year versus 23% gains in theSPDR S&P 500 ETF Trust (SPY). Still, some ETFs emerged as clear winners. Higher current income acted as a tailwind for some stocks and ETFs.
Even if the stock or the fund falls, 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.
On the other hand, dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. These generally act as a hedge against economic uncertainty and act as a quality exposure. Additionally, aristocrats tend to skew the portfolio to less-volatile sectors and mature companies.
The underlying S&P Emerging Markets Dividend Opportunities Index includes 100 tradable, exchange-listed common stocks from emerging market countries that offer high dividend yields. The fund charges 49 bps in fees.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) – Up 36.2%; Yield 1.68% annually
The underlying NASDAQ Technology Dividend Index includes up to 100 Technology and Telecommunications companies that pay a regular or common dividend. The fund charges 50 bps in fees.
Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report) – Up 30.4%; Yield 7.05% annually
The Nationwide Risk-Managed Income ETF seeks current income with downside protection. the fund targets high monthly income. It is a rules-based, options trading strategy that seeks to produce high income using the Nasdaq-100 Index. The fund charges 68 bps in fees.
This ETF is active and does not track a benchmark. The fund invests in dividend-paying U.S. stocks paired with an S&P 500 index-based option overlay for additional income. The fund charges 85 bps in fees.
First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) – Up 28.7%; Yield 2.03% annually
The underlying NASDAQ US Small Mid Cap Rising Dividend Achievers Index is composed of the securities of 100 small and mid-cap companies with a history of raising their dividends and exhibit the characteristics to continue to do so in the future. The fund charges 85 bps in fees.
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5 Best-Performing Dividend ETFs of 2023
While the stock market has recorded an incredible rally in 2023, exceeding all expectations, there are valid reasons to approach the current situation with caution. The excitement for AI, global growth slowdown and still-present inflationary pressure indicate potential bubbles.
In individual corporate news, transportation, e-commerce and business services company FedEx (FDX - Free Report) shares tumbled more than 10% after the delivery company missed quarterly profit expectations. It also cut its full-year revenue forecast amid a drop in U.S. Postal Service demand. This strengthens the fear of economic growth slowdown.
Against this backdrop, below we highlight a few dividend ETF winners of 2023. This is especially true given the dividend-focused products offer safety through payouts and stability in the form of mature companies that are less volatile amid large swings in stock prices.
Both Dividend Growth & High Dividends Were Winners
High-dividend ETFs as well as dividend aristocrats were winners in 2023. Divined stocks normally underperform in a rising rate environment. Dividend fund iShares Select Dividend ETF (DVY) is off 4.4% this year versus 23% gains in theSPDR S&P 500 ETF Trust (SPY). Still, some ETFs emerged as clear winners. Higher current income acted as a tailwind for some stocks and ETFs.
Even if the stock or the fund falls, 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.
On the other hand, dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. These generally act as a hedge against economic uncertainty and act as a quality exposure. Additionally, aristocrats tend to skew the portfolio to less-volatile sectors and mature companies.
Wining ETFs in Focus
SPDR S&P Emerging Markets Dividend ETF (EDIV - Free Report) – Up 37.7%; Yield 4.39% annually
The underlying S&P Emerging Markets Dividend Opportunities Index includes 100 tradable, exchange-listed common stocks from emerging market countries that offer high dividend yields. The fund charges 49 bps in fees.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) – Up 36.2%; Yield 1.68% annually
The underlying NASDAQ Technology Dividend Index includes up to 100 Technology and Telecommunications companies that pay a regular or common dividend. The fund charges 50 bps in fees.
Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report) – Up 30.4%; Yield 7.05% annually
The Nationwide Risk-Managed Income ETF seeks current income with downside protection. the fund targets high monthly income. It is a rules-based, options trading strategy that seeks to produce high income using the Nasdaq-100 Index. The fund charges 68 bps in fees.
Dividend Performers ETF (IPDP - Free Report) – Up 29.8%; Yield 1.26% annually
This ETF is active and does not track a benchmark. The fund invests in dividend-paying U.S. stocks paired with an S&P 500 index-based option overlay for additional income. The fund charges 85 bps in fees.
First Trust SMID Cap Rising Dividend Achievers ETF (SDVY - Free Report) – Up 28.7%; Yield 2.03% annually
The underlying NASDAQ US Small Mid Cap Rising Dividend Achievers Index is composed of the securities of 100 small and mid-cap companies with a history of raising their dividends and exhibit the characteristics to continue to do so in the future. The fund charges 85 bps in fees.