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The hunt for dividend in the equity market is always steady irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains?
The demand of dividends can be easily understood from the outstanding gains from this segment in 2019 despite a superb broader market rally in the second half.
There were two main market movers in 2019 — U.S.-China trade relation and a dovish Fed. Global policy easing, a decent oil story and easing Brexit uncertainty also added to the strength.
Yield on benchmark 10-year U.S. Treasury yield slipped to the yearly-low of 1.47% on Aug 28 while the yearly-high point of 2.79% was recorded on Jan 18. Occasional trade tensions and the resultant recessionary fears, in fact, led to an inversion of the yield curve in mid-2019. As of Dec 23, 2019, the benchmark treasury yield was low at 1.93%.
A Perfect Backdrop for Dividend Investing
The accommodative Fed, ECB, BoJ and many other global central banks did good for stocks as there were incessant cheap money inflows. Among stocks, income-producing securities fared even better as investors were in search of solid and steady current income.
What’s more, stocks with dividend growth point to quality investing – a pre-requisite to making money in this volatile environment. These companies, known as dividend aristocrats, are usually good for value investing and are in demand when volatility flares up.
Dividend ETF Winners
Against this backdrop, below we highlight a few dividend ETFs that beat the S&P 500 (up 28.3%) (as of Dec 23, 2019).
First Trust NASDAQ Rising Dividend Achievers ETF (RDVY - Free Report) – Up 37.9%
The underlying NASDAQ US Rising Dividend Achievers Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends. The fund yields 1.55% annually and has a Zacks Rank #2 (Buy) (read: A Bunch of Top-Ranked ETFs That Crushed the Market in 2019).
WisdomTree Global ex-U.S. Quality Dividend Growth Fund DNL) – Up 34.5%
The underlying WisdomTree Global ex-U.S. Dividend Growth Index is fundamentally weighted and measures the performance of dividend-paying stocks with growth characteristics in the developed and emerging markets outside of the United States. The Zacks Rank #3 (Hold) fund yields 1.80% annually (read: Top Foreign ETFs of 2019).
The underlying Reality Shares DIVCON Leaders Dividend Index invests in the largest U.S. companies by market capitalization that have the highest probability of increasing their dividends in the next 12 months. The Zacks Rank #3 fund yields 1.27% annually.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) – Up 33.2%
The underlying NASDAQ Technology Dividend Index includes up to 100 Technology and Telecommunications companies that pay out a regular or common dividend. The fund charges 50 bps in fees and yields 2.27% annually (read: Worried About Dividend ETFs' Rally? 5 Low P/E Plays for You).
WisdomTree International Hedged Dividend Growth Fund (IHDG - Free Report) – Up 33.2%
The underlying WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. The fund yields 1.44% annually.
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5 Dividend ETFs That Beat S&P 500 in 2019
The hunt for dividend in the equity market is always steady irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains?
The demand of dividends can be easily understood from the outstanding gains from this segment in 2019 despite a superb broader market rally in the second half.
There were two main market movers in 2019 — U.S.-China trade relation and a dovish Fed. Global policy easing, a decent oil story and easing Brexit uncertainty also added to the strength.
Yield on benchmark 10-year U.S. Treasury yield slipped to the yearly-low of 1.47% on Aug 28 while the yearly-high point of 2.79% was recorded on Jan 18. Occasional trade tensions and the resultant recessionary fears, in fact, led to an inversion of the yield curve in mid-2019. As of Dec 23, 2019, the benchmark treasury yield was low at 1.93%.
A Perfect Backdrop for Dividend Investing
The accommodative Fed, ECB, BoJ and many other global central banks did good for stocks as there were incessant cheap money inflows. Among stocks, income-producing securities fared even better as investors were in search of solid and steady current income.
What’s more, stocks with dividend growth point to quality investing – a pre-requisite to making money in this volatile environment. These companies, known as dividend aristocrats, are usually good for value investing and are in demand when volatility flares up.
Dividend ETF Winners
Against this backdrop, below we highlight a few dividend ETFs that beat the S&P 500 (up 28.3%) (as of Dec 23, 2019).
First Trust NASDAQ Rising Dividend Achievers ETF (RDVY - Free Report) – Up 37.9%
The underlying NASDAQ US Rising Dividend Achievers Index is designed to provide access to a diversified portfolio of companies with a history of paying dividends. The fund yields 1.55% annually and has a Zacks Rank #2 (Buy) (read: A Bunch of Top-Ranked ETFs That Crushed the Market in 2019).
WisdomTree Global ex-U.S. Quality Dividend Growth Fund DNL) – Up 34.5%
The underlying WisdomTree Global ex-U.S. Dividend Growth Index is fundamentally weighted and measures the performance of dividend-paying stocks with growth characteristics in the developed and emerging markets outside of the United States. The Zacks Rank #3 (Hold) fund yields 1.80% annually (read: Top Foreign ETFs of 2019).
Reality Shares DIVCON Leaders Dividend ETF (LEAD - Free Report) – Up 33.7%
The underlying Reality Shares DIVCON Leaders Dividend Index invests in the largest U.S. companies by market capitalization that have the highest probability of increasing their dividends in the next 12 months. The Zacks Rank #3 fund yields 1.27% annually.
First Trust NASDAQ Technology Dividend Index Fund (TDIV - Free Report) – Up 33.2%
The underlying NASDAQ Technology Dividend Index includes up to 100 Technology and Telecommunications companies that pay out a regular or common dividend. The fund charges 50 bps in fees and yields 2.27% annually (read: Worried About Dividend ETFs' Rally? 5 Low P/E Plays for You).
WisdomTree International Hedged Dividend Growth Fund (IHDG - Free Report) – Up 33.2%
The underlying WisdomTree International Hedged Quality Dividend Growth Index is designed to provide exposure to the developed market companies while at the same time neutralizing exposure to fluctuations between the value of foreign currencies and the U.S. dollar. The fund yields 1.44% annually.
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 >>