Despite heightened geopolitical tensions, rising rate worries and AI valuation woes, Wall Street has delivered strong performance so far this year. State Street SPDR S&P 500 ETF Trust (SPY Quick QuoteSPY - Free Report) has added about 11.6% in the year-to-date frame. A closer look shows that U.S. stocks capped a strong first half of 2026 and a robust second quarter driven by the strength in semiconductor stocks.

However, the rally lost momentum in the third quarter as investors reassessed lofty AI valuations, heavy capex on the AI theme and higher interest rates. The broader market remains almost flat during this phase.

Unsteady Global Markets

While some recent Big Tech earnings offered fresh cues to Wall Street for a further rally, the undercurrent of the global markets looks anything but steady. Meanwhile, the Middle East tensions persist.

Meanwhile, sticky inflation and rising rate fears are putting pressure on markets. Treasury yields climbed sharply. The Fed enacted a 25-bp rate this this week, with cues of at least one more hike this year.

Time for Dividend Investing?

In such a volatile scenario, dividend exchange-traded funds (ETFs) normally come to the rescue. The hunt for dividends in the equity market is always on, irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains? And 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, it makes sense to hold some higher-yielding, dividend-based ETFs. If the Fed hikes rates further, high current income could help investors weather the adverse impact to some extent.

ETFs in Focus  

iShares International Select Dividend ETF (IDV Quick QuoteIDV - Free Report)

The underlying Dow Jones EPAC Select Dividend Index of the fund measures the performance of a select group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The $8.62-billion fund yields 5.51% annually and charges 50 bps in fees.

Amplify CWP Enhanced Dividend Income ETF (DIVO Quick QuoteDIVO - Free Report)

The $7.89-billion fund seeks to offer both dividend and option income to investors on a monthly basis.Dividend and option income may provide lower share price volatility versus the overall market during times of broad-based market declines. DIVO is up 6% this year while it yields 6.39% annually. The fund charges 56 bps in fees.

Invesco S&P 500 High Dividend Low Volatility ETF (SPHD Quick QuoteSPHD - Free Report)

The $3.4-billion fund comprises of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility. The fund charges 30 bps in fees and yields 4.83% annually.  The fund has added about 5.2% in the year-to-date frame.

Pacer Global Cash Cows Dividend ETF (GCOW Quick QuoteGCOW - Free Report)

The $3.57-billion fund follows an index, which 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 50 bps in fees and yields 4.92% annually. The fund is up about 11% this year.

FT Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG Quick QuoteKNG - Free Report)

The $3.3-billion ETF tracks the CBOE S&P 500 Dividend Aristocrats Target Income Index Monthly Series, which is designed to track the performance of a hypothetical buy-write strategy on optionable constituents of the S&P 500 Dividend Aristocrat Index. It charges 74 bps in fees and yields 8.50% annually. The fund is flat this year.