We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Consider Increasing Exposure to Dividend ETFs Now?
Read MoreHide Full Article
Key Takeaways
Inflows of $24.1B in the first quarter signal a strong comeback for dividend funds.
Dividend ETFs gain as volatility and geopolitical risks rise.
Dividend ETFs offer income plus stability amid a downside.
The Middle East conflict has thrown global energy markets into turmoil, with surging oil prices weighing on growth prospects and heightening investor anxiety. The aftereffects are unlikely to offer much relief, as oil prices are expected to remain elevated, increasing the risk of oil-driven inflation.
As economic uncertainty increases, investors are becoming more cautious. The CBOE Volatility Index, which reflects market expectations of near-term volatility, has surged 65.45% year to date, capturing the tone of 2026 so far.
However, recent reports of progress toward de-escalation between Tehran and Washington have eased market volatility, offering a near-term positive for risk assets. Even if the Middle East conflict subsides, the broader geopolitical landscape and the complexities it has introduced are likely to keep risks elevated.
In this environment, dividend ETFs tend to stand out, as the demand for consistent income from equities remains across market conditions. With investors rotating toward more stable assets, dividend ETFs are emerging as a preferred choice.
The Case for Dividend ETFs
Dividend-paying securities serve as primary sources of reliable income for investors, particularly during periods of equity market volatility. These securities offer a dual advantage — safety, in the form of payouts, and stability, in the form of mature companies that are less volatile to large swings in stock prices. Companies offering dividends often act as a hedge against economic uncertainty.
According to LSEG Lipper data, as quoted on Reuters, U.S. dividend funds have seen $24.1 billion in inflows so far this year, the strongest first quarter in four years, reversing three years of outflows and signaling renewed investor interest.
Additionally, incorporating dividend ETFs can serve as an effective diversification tool for investors’ portfolios. Per analysts, as quoted on the abovementioned Reuters article, dividend funds are expected to see sustained investor interest, supported by elevated oil prices, unresolved tensions in the Strait of Hormuz and a rotation away from AI-focused investments.
ETFs to Consider
Against this backdrop, we highlight a few dividend ETFs investors may consider adding to their portfolios.
Vanguard Dividend Appreciation ETF seeks to track the performance of the S&P U.S. Dividend Growers Index, which includes companies that have a record of increasing dividends over time. The fund charges an annual fee of 0.04% and has a dividend yield of 1.61%.
Vanguard Dividend Appreciation ETF has a one-month average trading volume of about 1.65 million shares and has gathered an asset base of $97.2 billion. The fund has gained 1.67% over the past month and 3.63% year to date.
Schwab US Dividend Equity ETF seeks to track the performance of the Dow Jones U.S. Dividend 100 Index, which measures the performance of high dividend-yielding stocks issued by U.S. companies that have a record of consistently paying dividends. The fund charges an annual fee of 0.06% and has a dividend yield of 3.44%.
Schwab US Dividend Equity ETF has a one-month average trading volume of about 26.99 million shares and has gathered an asset base of $84.03 billion. The fund has gained 6.54% over the past month and 15.74% year to date.
Vanguard High Dividend Yield Index ETF (VYM - Free Report)
Vanguard High Dividend Yield Index ETF seeks to track the performance of the FTSE High Dividend Yield Index, which consists of common stocks of companies that pay dividends that generally are higher than average. The fund charges an annual fee of 0.04% and has a dividend yield of 2.37%.
Vanguard High Dividend Yield Index ETF has a one-month average trading volume of about 2.04 million shares and has gathered an asset base of $71.31 billion. The fund has gained 3.41% over the past month and 8.06% year to date.
iShares Core Dividend Growth ETF seeks to track the performance of the Morningstar US Dividend Growth Index, which is composed of U.S. equities with a history of consistently growing dividends. The fund charges an annual fee of 0.08% and has a dividend yield of 2.10%.
iShares Core Dividend Growth ETF has a one-month average trading volume of about 3.29 million shares and has gathered an asset base of $36.85 billion. The fund has gained 2.86% over the past month and 6.44% year to date.
Capital Group Dividend Value ETF employs an active strategy and focuses on companies that pay dividends or have the potential to pay dividends. The fund charges an annual fee of 0.33% and has a dividend yield of 1.34%.
Capital Group Dividend Value ETF has a one-month average trading volume of about 4.63 million shares and has gathered an asset base of $28.39 billion. The fund has gained 1.72% over the past month and 4.56% year to date.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
Should You Consider Increasing Exposure to Dividend ETFs Now?
Key Takeaways
The Middle East conflict has thrown global energy markets into turmoil, with surging oil prices weighing on growth prospects and heightening investor anxiety. The aftereffects are unlikely to offer much relief, as oil prices are expected to remain elevated, increasing the risk of oil-driven inflation.
As economic uncertainty increases, investors are becoming more cautious. The CBOE Volatility Index, which reflects market expectations of near-term volatility, has surged 65.45% year to date, capturing the tone of 2026 so far.
However, recent reports of progress toward de-escalation between Tehran and Washington have eased market volatility, offering a near-term positive for risk assets. Even if the Middle East conflict subsides, the broader geopolitical landscape and the complexities it has introduced are likely to keep risks elevated.
In this environment, dividend ETFs tend to stand out, as the demand for consistent income from equities remains across market conditions. With investors rotating toward more stable assets, dividend ETFs are emerging as a preferred choice.
The Case for Dividend ETFs
Dividend-paying securities serve as primary sources of reliable income for investors, particularly during periods of equity market volatility. These securities offer a dual advantage — safety, in the form of payouts, and stability, in the form of mature companies that are less volatile to large swings in stock prices. Companies offering dividends often act as a hedge against economic uncertainty.
According to LSEG Lipper data, as quoted on Reuters, U.S. dividend funds have seen $24.1 billion in inflows so far this year, the strongest first quarter in four years, reversing three years of outflows and signaling renewed investor interest.
Additionally, incorporating dividend ETFs can serve as an effective diversification tool for investors’ portfolios. Per analysts, as quoted on the abovementioned Reuters article, dividend funds are expected to see sustained investor interest, supported by elevated oil prices, unresolved tensions in the Strait of Hormuz and a rotation away from AI-focused investments.
ETFs to Consider
Against this backdrop, we highlight a few dividend ETFs investors may consider adding to their portfolios.
Vanguard Dividend Appreciation ETF (VIG - Free Report)
Vanguard Dividend Appreciation ETF seeks to track the performance of the S&P U.S. Dividend Growers Index, which includes companies that have a record of increasing dividends over time. The fund charges an annual fee of 0.04% and has a dividend yield of 1.61%.
Vanguard Dividend Appreciation ETF has a one-month average trading volume of about 1.65 million shares and has gathered an asset base of $97.2 billion. The fund has gained 1.67% over the past month and 3.63% year to date.
Schwab US Dividend Equity ETF (SCHD - Free Report)
Schwab US Dividend Equity ETF seeks to track the performance of the Dow Jones U.S. Dividend 100 Index, which measures the performance of high dividend-yielding stocks issued by U.S. companies that have a record of consistently paying dividends. The fund charges an annual fee of 0.06% and has a dividend yield of 3.44%.
Schwab US Dividend Equity ETF has a one-month average trading volume of about 26.99 million shares and has gathered an asset base of $84.03 billion. The fund has gained 6.54% over the past month and 15.74% year to date.
Vanguard High Dividend Yield Index ETF (VYM - Free Report)
Vanguard High Dividend Yield Index ETF seeks to track the performance of the FTSE High Dividend Yield Index, which consists of common stocks of companies that pay dividends that generally are higher than average. The fund charges an annual fee of 0.04% and has a dividend yield of 2.37%.
Vanguard High Dividend Yield Index ETF has a one-month average trading volume of about 2.04 million shares and has gathered an asset base of $71.31 billion. The fund has gained 3.41% over the past month and 8.06% year to date.
iShares Core Dividend Growth ETF (DGRO - Free Report)
iShares Core Dividend Growth ETF seeks to track the performance of the Morningstar US Dividend Growth Index, which is composed of U.S. equities with a history of consistently growing dividends. The fund charges an annual fee of 0.08% and has a dividend yield of 2.10%.
iShares Core Dividend Growth ETF has a one-month average trading volume of about 3.29 million shares and has gathered an asset base of $36.85 billion. The fund has gained 2.86% over the past month and 6.44% year to date.
Capital Group Dividend Value ETF (CGDV - Free Report)
Capital Group Dividend Value ETF employs an active strategy and focuses on companies that pay dividends or have the potential to pay dividends. The fund charges an annual fee of 0.33% and has a dividend yield of 1.34%.
Capital Group Dividend Value ETF has a one-month average trading volume of about 4.63 million shares and has gathered an asset base of $28.39 billion. The fund has gained 1.72% over the past month and 4.56% year to date.