After peaking at the end of last month, the S&P 500 and the Nasdaq Composite Index logged in the fourth straight day of decline last week with the latter registering the worst start to September since 2008. The sluggish trading was driven by a steep sell-off in the tech sector and Trump’s new tariff threat.
Donald Trump threatened to impose tariffs on additional $267 billion, in addition to the proposed 25% duty to be levied on $200 billion of Chinese goods. The move will escalate trade tensions between the United States and China. Additionally, Bloomberg News reports that the United States and Canada will likely end the week with a no trade deal (read: Counter Renewed Trade Tensions With 5 ETFs). Further, the prospect of faster-than-expected rates hike also took a toll on the stocks. If these weren’t enough, the seasonal phenomenon resulted in the decline. September is historically a weak month for the stock market and even worse in the mid-term election years. The return of volatility in the stock market has rekindled investors’ love for products that provide stability and safety in a rocky market. Nothing seems a better strategy than picking dividend-focused products in this kind of an environment. VIDEO
Dividend-focused products offer safety in the form of payouts while at the same time providing stability as mature companies are less volatile to large swings in stock prices. Dividend paying securities are the major source of consistent income for investors to create wealth when returns from the equity market are at risk. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis (read:
Tech Sell-Off, New Tariff Threat Put Low Beta ETFs in Focus). That being said, we highlight five dividend ETFs for investors seeking yields and returns in a rocky market. These funds yield higher than the S&P 500, making them excellent choices in the current market turmoil. Global X SuperDividend U.S. ETF DIV This fund provides exposure to 50 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. It is widely diversified across each component as none of these hold more than 2.85% of the assets. Utilities accounts for one-fourth of the portfolio, closely followed by real estate (23%), consumer discretionary (14%), energy (14%), and consumer staples (13%). The product has amassed $420 million in its asset base while trading in moderate volume of about 69,000 shares. It charges 45 bps in fees per year from investors and has a solid dividend yield of 6.08%. The product has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: 5 ETFs Yielding 5% or More). WBI Power Factor High Dividend ETF WBIY This ETF offers exposure to quality stocks that have the highest dividend yield with a deep value bias and multi-factor fundamental analysis. It follows the Solactive Power Factor High Dividend Index, holding 51 stocks in the basket with none making up for more than 5.8% share. Consumer discretionary is the top sector with one-fourth of the portfolio while financials, telecom and consumer staples round off the next three spots. The product has amassed $123.8 million in its asset base and has an annual yield of 4.21%. It charges 70 bps in annual fees and trades in lower volume of 30,000 shares a day on average. SPDR Portfolio S&P 500 High Dividend ETF SPYD This fund provides exposure to stocks with high level of dividend income and the opportunity for capital appreciation by tracking the S&P 500 High Dividend Index. Holding 80 stocks in its basket, the fund is well-diversified across securities with each making up for less than 2% of assets. It is slightly skewed toward real estate at 24.6%, closely followed by utilities (20.7%), and consumer discretionary (12%). The fund has AUM of $678.3 million and trades in volume of about 159,000 shares. It charges 7 bps in annual fees and has a good dividend yield of 3.90%. It has a Zacks ETF Rank of #2 (Buy) with a Medium risk outlook. Invesco High Yield Equity Dividend Achievers ETF ( PEY Quick Quote PEY - Free Report) This fund offers exposure to well-diversified 50 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 54 bps in fees from investors. Utilities, consumer staples, financials, and consumer discretionary are the top four sectors accounting for double-digit exposure each. The product has amassed $782.8 million in AUM and sees average daily volume of 126,000 shares a day. It sports annual dividend yield of 3.67% and has a Zacks ETF Rank #3 with a Medium risk outlook (read: 5 Dividend Growth ETFs to Fight Trade & Inflation Fears). WisdomTree U.S. SmallCap Dividend Fund DES This ETF offers exposure to the dividend-paying small-cap companies in the U.S. equity market by tracking the WisdomTree U.S. SmallCap Dividend Index. Holding 718 stocks in its basket, it is widely spread out across components with each security holding less than 1.5% share. Consumer discretionary, industrials, real estate and financials are the top four sectors accounting for a double-digit exposure each. The product has amassed $2.2 billion in its asset base and charges 38 bps in annual fees. It has an annual dividend yield of 2.87% and a Zacks ETF Rank #3 with a Medium risk outlook. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>