Wall Street received good news this month in the form of a Fed rate cut. The Fed enacted a 50-bp rate cut but the move was insufficient to keep the broader market rallying. Although U.S. stocks hit highs initially, they wavered occasionally this week. Investors expressed doubts over the health of the economy and the chances of another solid rate cut.
Meanwhile, consumer confidence fell in September as Americans grew increasingly worried about a cooling labor market. The latest index reading from the Conference Board was 98.7, below the 105.6 seen in August and lower than what the 104 economists surveyed by Bloomberg expected, as quoted on Yahoo Finance. The drop in consumer confidence from August to September was the largest decline since August 2021, according to the Conference Board.
Moreover, new home sales declined in August following an increase in the prior month as still-high mortgage rates as well as high prices kept buyers from entering the housing market. Also, some investors continue to fear that the huge AI investments made by big tech companies would pay off later than expected.
The scale of profitability of those investments is also unknown now, while the high valuation of the AI stocks is a concern for many investors. Meanwhile, the Fed rate cut and the resultant decline in bond yields should boost the demand for high-income assets.
Time for High Dividend ETFs?
High-dividend stocks and exchange-traded funds (ETFs) provide investors with avenues to make up for capital losses if that happens at all. Against this backdrop, below we highlight a few of the dividend ETFs that yield more than 5% currently.
The SPDR S&P 500 ETF Trust SPY added 1.7% past month (as of Sept. 25, 2024). Some of these dividend ETFs outperformed SPY ETF in the past month.
High Dividend ETFs in Focus
Global X SuperDividend ETF SDIV – Yields 10.46%; Up 4.81% Past Month
The underlying Solactive Global SuperDividend Index tracks the performance of 100 equally weighted companies that rank among the highest dividend-yielding equity securities in the world. The index provider applies certain dividend stability filters. The fund charges 58 bps in fees and yields 10.46% annually (as of Sept. 25, 2024).
Hoya Capital High Dividend Yield ETF RIET – Yields 9.15%; Up 5.31% Past Month
The underlying Hoya Capital High Dividend Yield Index is a rules-based index that is designed to provide diversified exposure to 100 U.S.-listed real estate-related securities that collectively provide income through high dividend yields. The fund charges 50 bps in fees and yields 9.15% annually.
U.S. Global Sea to Sky Cargo ETF SEA – Yields 8.39%; Up 3.45% Past Month
The underlying U.S. Global Sea to Sky Cargo Index tracks the performance of marine shipping, air freight and courier, and port and harbor operating companies. The fund charges 60 bps in fees.
FT Vest S&P 500 Dividend Aristocrats Target Income ETF KNG – Yields 7.59%; Up 2.47% Past Month
The underlying Cboe S&P 500 Dividend Aristocrats Target Income Index Monthly Series is designed to track the performance of a hypothetical buy-write strategy on optionable constituents of the S&P 500 Dividend Aristocrat Index. The fund charges 75 bps in fees.
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SPDR S&P 500 ETF (SPY): ETF Research Reports
Global X SuperDividend ETF (SDIV): ETF Research Reports
U.S. Global Sea to Sky Cargo ETF (SEA): ETF Research Reports
Hoya Capital High Dividend Yield ETF (RIET): ETF Research Reports
