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Dividend ETFs are quietly beating the S&P 500 in 2026, amid geopolitical tensions and tech-sector weakness.
While Japan-focused DFJ surges on election optimism, SCHD, HDV and EYLD offer quality dividend exposure.
Wall Street has delivered a moderate performance so far this year. SPDR S&P 500 ETF Trust (SPY - Free Report) has gained about 0.2% so far this year, SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has added about 2.2%, the Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) has lost about 1.6% and iShares Russell 2000 ETF (IWM - Free Report) has surged about 6.4% (as of Feb. 19, 2026).
The key events that have shaped the market this year were President Trump’s announcement of former Fed governor Kevin Warsh’s nomination as the next Fed chair, heightened geopolitical tensions, a roller-coaster ride of precious metals, winter storm Fern and its impact on natural gas prices, the AI investment fatigue and the resultant tech slump, and election optimism in Japan. Most recently, U.S.-Iran tensions have grabbed investors’ attention and boosted the energy market.
Navigating Volatile Markets With Dividend ETFs
In such a volatile market, dividend ETFs often come to the rescue. The hunt for dividends in the equity market is always on, irrespective of market conditions. If investors are mired in a web of equity market uncertainty, global growth worries and geopolitical crisis, the lure for dividend investing increases further.
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 prerequisite to making money in this volatile environment.
Against this backdrop, below we highlight a few of the dividend ETFs that have outperformed the S&P 500 so far this year (as of Feb. 19, 2026).
Winning ETFs in Focus
WisdomTree Japan SmallCap Dividend Fund (DFJ - Free Report) – Up 14.2%
Japan ETFs are experiencing a significant rally following the election victory of Prime Minister Sanae Takaichi, which strengthened expectations for pro-growth policies, tax reforms, and a weaker yen.
The underlying WisdomTree Japan SmallCap Dividend Index is comprised of dividend-paying small capitalization companies in Japan. The fund charges 58 basis points (bps) in fees and yields 2.35% annually.
Schwab US Dividend Equity ETF (SCHD - Free Report) – Up 13.9%
The underlying Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The fund charges 6 bps in fees and yields 3.32% annually.
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) – Up 13.7%
The underlying Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have delivered dividend consistency and dividend sustainability. The fund charges 43 bps in fees and yields 3.52% annually.
iShares Core High Dividend ETF (HDV - Free Report) – Up 13%
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 and yields 2.83% annually.
The Cambria Emerging Shareholder Yield ETF is actively managed and seeks to offer exposure to equity securities, including common stock and depositary receipts, issued by publicly listed companies in emerging foreign markets that provide high shareholder yield. The fund charges 63 bps in fees and yields 4.72% annually.
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5 Dividend ETFs Beating the S&P 500 This Year
Key Takeaways
Wall Street has delivered a moderate performance so far this year. SPDR S&P 500 ETF Trust (SPY - Free Report) has gained about 0.2% so far this year, SPDR Dow Jones Industrial Average ETF Trust (DIA - Free Report) has added about 2.2%, the Nasdaq-100 ETF Invesco QQQ Trust, Series 1 (QQQ - Free Report) has lost about 1.6% and iShares Russell 2000 ETF (IWM - Free Report) has surged about 6.4% (as of Feb. 19, 2026).
The key events that have shaped the market this year were President Trump’s announcement of former Fed governor Kevin Warsh’s nomination as the next Fed chair, heightened geopolitical tensions, a roller-coaster ride of precious metals, winter storm Fern and its impact on natural gas prices, the AI investment fatigue and the resultant tech slump, and election optimism in Japan. Most recently, U.S.-Iran tensions have grabbed investors’ attention and boosted the energy market.
Navigating Volatile Markets With Dividend ETFs
In such a volatile market, dividend ETFs often come to the rescue. The hunt for dividends in the equity market is always on, irrespective of market conditions. If investors are mired in a web of equity market uncertainty, global growth worries and geopolitical crisis, the lure for dividend investing increases further.
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 prerequisite to making money in this volatile environment.
Against this backdrop, below we highlight a few of the dividend ETFs that have outperformed the S&P 500 so far this year (as of Feb. 19, 2026).
Winning ETFs in Focus
WisdomTree Japan SmallCap Dividend Fund (DFJ - Free Report) – Up 14.2%
Japan ETFs are experiencing a significant rally following the election victory of Prime Minister Sanae Takaichi, which strengthened expectations for pro-growth policies, tax reforms, and a weaker yen.
The underlying WisdomTree Japan SmallCap Dividend Index is comprised of dividend-paying small capitalization companies in Japan. The fund charges 58 basis points (bps) in fees and yields 2.35% annually.
Schwab US Dividend Equity ETF (SCHD - Free Report) – Up 13.9%
The underlying Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends, selected for fundamental strength relative to their peers, based on financial ratios. The fund charges 6 bps in fees and yields 3.32% annually.
First Trust Morningstar Dividend Leaders Index Fund (FDL - Free Report) – Up 13.7%
The underlying Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have delivered dividend consistency and dividend sustainability. The fund charges 43 bps in fees and yields 3.52% annually.
iShares Core High Dividend ETF (HDV - Free Report) – Up 13%
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 and yields 2.83% annually.
Cambria Emerging Shareholder Yield ETF (EYLD - Free Report) – Up 12.9%
The Cambria Emerging Shareholder Yield ETF is actively managed and seeks to offer exposure to equity securities, including common stock and depositary receipts, issued by publicly listed companies in emerging foreign markets that provide high shareholder yield. The fund charges 63 bps in fees and yields 4.72% annually.