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5 Solid High Dividend Value ETFs & Stocks to Buy Now

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Heightened volatility has once again shaken the stock market badly and pushed all major indices deep in red to start the final quarter of 2018. The CBOE Volatility Index (VIX), also known as the fear gauge, jumped to more than 28, its highest level since Feb 12, 2018. This suggests that market fears have started to set in. The fear gauge tends to outperform when markets are falling or fear levels are high.

Soaring bond yields have dampened demand for riskier assets as it has sparked speculation about faster-than-expected rate hikes. Higher rates will likely erode corporate profits and slow down economic growth, making investors less willing to pay high prices for stocks. Additionally, the ongoing trade war between the United States and its major allies have added to the woes as it is the biggest threat to economic growth. The combination of other factors like ongoing troubles in emerging markets, Iran oil sanctions, another budget deadline and the mid-term election in November will continue to weigh on the stocks (read: Yields Are Soaring: Here's How to Short Treasury With ETFs).  

Nevertheless, the dual tailwinds of booming domestic growth and surging corporate profits will continue to keep the momentum in stocks alive. Historic tax cuts, higher government spending and deregulation are spurring growth. Robust job gains, growing wages, record low unemployment, and an 18-year high consumer confidence will continue to drive the longest nine-year bull run.

In such a scenario, investors are looking for products that provide stability and safety in a rocky market. Nothing seems a better strategy than picking ETFs with a combination of value stocks and higher dividend yields in this kind of an environment.

Inside the Strategy

Value stocks have strong fundamentals — earnings, dividends, book value and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payments offer safety in times of market turbulence.

Further, zeroing in on high dividend paying securities within this space leads to extra income. This is because high-dividend paying securities are major sources of consistent income for investors, creating wealth when returns from the equity market are at risk (read: 5 Dividend ETFs Worth Buying Now).

Given this, investors may want to consider a nice play in the current erratic market. For them, we have presented five ETFs and stocks that will likely outperform in the coming weeks if volatility prevails.

ETF Picks

Using our database, we have selected value ETFs that provide exposure to the broad stock market instead of a particular sector and have a Zacks ETF Rank #2 (Buy) or #3 (Hold) with an expense ratio of below 0.40% and dividend yield of more than 3%.

SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report)

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.

Zacks ETF Rank: #2
Expense Ratio: 0.07%
AUM: $715.4 million
Dividend Yield: 4.21%

Legg Mason Low Volatility High Dividend ETF (LVHD - Free Report)

This fund provides exposure to U.S. companies with a relatively high yield, low price and earnings volatility by tracking the QS Low Volatility High Dividend Index (read: Tech Sell-Off, New Tariff Threat Put Low Beta ETFs in Focus).

Zacks ETF Rank: #3
Expense Ratio: 0.27%
AUM: $587.8 million
Dividend Yield: 3.55%

WisdomTree U.S. High Dividend Fund (DHS - Free Report)

This ETF provides exposure to the high dividend-yielding stocks by tracking the WisdomTree High Dividend Index.

Zacks ETF Rank: #3
Expense Ratio: 0.38%
AUM: $945 million
Dividend Yield: 3.48%

iShares Core High Dividend ETF (HDV - Free Report)

This ETF offers exposure to high quality and high dividend stocks and tracks the Morningstar Dividend Yield Focus Index.

Zacks ETF Rank: #3
Expense Ratio: 0.08%
AUM: $6.1 billion
Dividend Yield: 3.47%

SPDR Russell 1000 Yield Focus ETF (ONEY - Free Report)

This fund seeks to track the Russell 1000 Yield Focused Factor Index, which measures the performance of large-cap securities demonstrating a combination of core factors (high value, high quality, and low size characteristics), with a focus factor comprising high yield characteristics (read: High Yield ETF Hits New 52-Week High).

Zacks ETF Rank: #3
Expense Ratio: 0.20%
AUM: $403.1 million
Dividend Yield: 3.41%

Stock Picks

We have chosen five top picks using the Zacks Stock Screener that fits our criteria: a Zacks Rank #1 (Strong Buy) or 2 (Buy), a Value Score of A, a top-ranked Zacks Industry within the top 40%, double-digit earnings growth for this year and dividend yield of more than 3%. Our chosen stocks are:

CONSOL Coal Resources LP (CCR - Free Report)

The company manages and develops active thermal coal operations. It is engaged in underground mines and related infrastructure that produce high- BTU bituminuous thermal coal. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Rank: #1
Zacks Industry Rank: Top 7%
This Year Estimated Earnings Growth: 57.53%
Dividend Yield: 11.06%

Global Partners LP (GLP - Free Report)

This is a Delaware limited partnership formed by affiliates of the Slifka family. Global Partners owns, controls or has access to one of the largest terminal networks of refined petroleum products in New England.

Zacks Rank: #1
Zacks Industry Rank: Top 31%
This Year Estimated Earnings Growth: 52.52%
Dividend Yield: 10.53%

Delek Logistics Partners L.P. (DKL - Free Report)

It owns, operates, acquires and constructs crude oil and refined products logistics and marketing assets (read: ETFs Set to Benefit/Lose From Higher Brent Prices).

Zacks Rank: #2
Zacks Industry Rank: Top 16%
This Year Estimated Earnings Growth: 42.11%
Dividend Yield: 9.53%

Manulife Financial Corp (MFC - Free Report)

It is engaged in providing financial protection products and investment management services to individuals, families, businesses and groups in selected international markets.

Zacks Rank: #2
Zacks Industry Rank: Top 13%
This Year Estimated Earnings Growth: 18.71%
Dividend Yield: 4.22%

Domtar Corporation (UFS - Free Report)

It is a leading provider of a wide variety of fiber-based products including communication, specialty and packaging papers, market pulp and absorbent hygiene products.

Zacks Rank: #2
Zacks Industry Rank: Top 36%
This Year Estimated Earnings Growth: 46.92%
Dividend Yield: 3.79%

Bottom Line

These ETFs and stocks will likely outperform amid market uncertainty. As such, investors should not forget the value space and take a closer look at a few of the attractive products with a high dividend tilt for excellent exposure and some outperformance in the near term.

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