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Play These Dividend Growth ETFs Amid Coronavirus Crisis
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The coronavirus outbreak continues to wreak havoc, with 1.5 million confirmed cases and above 88,000 casualties globally, per a Johns Hopkins University data. The United States remains on top of the chart with the highest number of infected cases. It recorded in excess of 432,000 cases, with a death toll of more than 14,000. Notably, the outbreak is leading to an unprecedented collapse of economic activities, as governments are forced to shut down commerce and either suggest or order people to remain indoors, in an effort to contain the spread of the virus.
The job market is also likely to be severely hit as Americans are increasingly filing claims for unemployment benefits. Per the report released by the Labor Department, U.S. unemployment claims surged to a record 6 million (week ending Mar 27). With elevated unemployment levels, the spending capacity of consumers will, undoubtedly, be compromised to a large extent. The latest reports on U.S. consumer sentiment show that the metric dropped to nearly a three-and-a-half-year low in March, reflecting the impact of the coronavirus outbreak. The impact of the coronavirus pandemic can be seen in the manufacturing sector that makes around 11% of the U.S. economy (read: ETFs at Risk as US Consumer Sentiment Hits Near 3.5-Year Low).
Studying the current scenario, JPMorgan Chase & Co. (JPM - Free Report) economists project that the global economy will see lost output at $5.5 trillion or almost 8% of GDP through the end of 2021. Moreover, they believe that the cost to developed economies will be similar to what was borne by them during the 2008-2009 and 1974-1975 recessions. Going on, according to Morgan Stanley (MS - Free Report) , GDP in developed markets will return to the pre-pandemic levels by the third quarter of 2021.
Dividend Growth ETFs for a Healthy Portfolio
The appeal of dividend ETFs has been rising in the face of easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth. This is because dividend-paying securities are major sources of consistent income for investors when returns from equity markets are uncertain.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ could be the smartest way to deal with the current market turmoil. Here are a few ETFs to consider:
This is the largest and most popular ETF in the dividend space, with an AUM of $39.24 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks with a record of raising dividends every year. It holds 182 securities in the basket and charges 6 basis points (bps) in annual fees. VIG carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: 6 Healthy ETFs Amid Coronavirus-Hit Economy).
This product provides exposure to high-quality companies that have not just paid dividends but have hiked the same for at least 25 consecutive years, with most doing so for 40 years or more. It follows the S&P 500 Dividend Aristocrats Index, holding 64 securities in its basket. NOBL has amassed $5.40 billion in its asset base. It has an expense ratio of 0.35% and a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: Guide to 10 Most Popular Dividend ETFs).
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. Holding 478 stocks in its basket, the fund has an AUM of $9.35 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2, with a Medium-risk outlook.
First Trust Rising Dividend Achievers ETF (RDVY - Free Report)
This fund lends exposure to a diversified portfolio of 51 companies with a stellar dividend payout history. It tracks the NASDAQ US Rising Dividend Achievers Index, charging investors 50 bps in annual fees. The ETF has accumulated $1.05 billion in its asset base. It carries a Zacks ETF Rank of 3, with a Medium-risk outlook.
With $290.6 million, this fund offers exposure to 259 companies that have raised dividends for 10 or more straight fiscal years. It has an expense ratio of 0.54%. PFM is a Zacks #3 Ranked ETF, with a Medium-risk outlook.
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Play These Dividend Growth ETFs Amid Coronavirus Crisis
The coronavirus outbreak continues to wreak havoc, with 1.5 million confirmed cases and above 88,000 casualties globally, per a Johns Hopkins University data. The United States remains on top of the chart with the highest number of infected cases. It recorded in excess of 432,000 cases, with a death toll of more than 14,000. Notably, the outbreak is leading to an unprecedented collapse of economic activities, as governments are forced to shut down commerce and either suggest or order people to remain indoors, in an effort to contain the spread of the virus.
The job market is also likely to be severely hit as Americans are increasingly filing claims for unemployment benefits. Per the report released by the Labor Department, U.S. unemployment claims surged to a record 6 million (week ending Mar 27). With elevated unemployment levels, the spending capacity of consumers will, undoubtedly, be compromised to a large extent. The latest reports on U.S. consumer sentiment show that the metric dropped to nearly a three-and-a-half-year low in March, reflecting the impact of the coronavirus outbreak. The impact of the coronavirus pandemic can be seen in the manufacturing sector that makes around 11% of the U.S. economy (read: ETFs at Risk as US Consumer Sentiment Hits Near 3.5-Year Low).
Studying the current scenario, JPMorgan Chase & Co. (JPM - Free Report) economists project that the global economy will see lost output at $5.5 trillion or almost 8% of GDP through the end of 2021. Moreover, they believe that the cost to developed economies will be similar to what was borne by them during the 2008-2009 and 1974-1975 recessions. Going on, according to Morgan Stanley (MS - Free Report) , GDP in developed markets will return to the pre-pandemic levels by the third quarter of 2021.
Dividend Growth ETFs for a Healthy Portfolio
The appeal of dividend ETFs has been rising in the face of easing monetary policy on the global front, and market uncertainty triggered by the pandemic and deceleration in global growth. This is because dividend-paying securities are major sources of consistent income for investors when returns from equity markets are uncertain.
Although there are plenty of options in the dividend ETF world, ‘dividend aristocrats’ or ‘dividend growers’ could be the smartest way to deal with the current market turmoil. Here are a few ETFs to consider:
Vanguard Dividend Appreciation ETF (VIG - Free Report)
This is the largest and most popular ETF in the dividend space, with an AUM of $39.24 billion. The fund follows the NASDAQ US Dividend Achievers Select Index, which is composed of high-quality stocks with a record of raising dividends every year. It holds 182 securities in the basket and charges 6 basis points (bps) in annual fees. VIG carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook (read: 6 Healthy ETFs Amid Coronavirus-Hit Economy).
ProShares S&P 500 Dividend Aristocrats ETF (NOBL - Free Report)
This product provides exposure to high-quality companies that have not just paid dividends but have hiked the same for at least 25 consecutive years, with most doing so for 40 years or more. It follows the S&P 500 Dividend Aristocrats Index, holding 64 securities in its basket. NOBL has amassed $5.40 billion in its asset base. It has an expense ratio of 0.35% and a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook (read: Guide to 10 Most Popular Dividend ETFs).
iShares Core Dividend Growth ETF (DGRO - Free Report)
This fund provides exposure to companies boasting a history of sustained dividend growth by tracking the Morningstar US Dividend Growth Index. Holding 478 stocks in its basket, the fund has an AUM of $9.35 billion. It charges 8 bps in fees per year and has a Zacks ETF Rank of 2, with a Medium-risk outlook.
First Trust Rising Dividend Achievers ETF (RDVY - Free Report)
This fund lends exposure to a diversified portfolio of 51 companies with a stellar dividend payout history. It tracks the NASDAQ US Rising Dividend Achievers Index, charging investors 50 bps in annual fees. The ETF has accumulated $1.05 billion in its asset base. It carries a Zacks ETF Rank of 3, with a Medium-risk outlook.
Invesco Dividend Achievers ETF (PFM - Free Report)
With $290.6 million, this fund offers exposure to 259 companies that have raised dividends for 10 or more straight fiscal years. It has an expense ratio of 0.54%. PFM is a Zacks #3 Ranked ETF, 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 >>