After markets experienced a dreadful September, October entered the picture with a strong start. After three consecutive positive weeks, however, sentiment has shifted and investors are becoming increasingly nervous. Stimulus talks appear dead until after the election, COVID is surging to record numbers, and investors are nervous about election uncertainties. Investors are also fearful of a double-dip recession if further global lockdowns occur. While there is some sliver of optimism with strong earnings and economic data, there is simply too much uncertainty for investors to be unequivocally bullish. One of the ways that investors can cope with the current market climate is by investing in ETFs that focus on quality dividend-paying companies. This is a strategy that offers investors investable indexes with broad exposure and consistent income streams.While many are concerned about these unpredictable markets, Q.ai’sdeep learning algorithms have identified several Top Dividend ETFs based on 90-day, 30-day, and 1-week fund flows. While our rating system usually includes Top Buys, Attractive, Neutral, Unattractive, and Top Shorts, this month, we have only one ETF rated Top Buy, and three rated Neutral. We have also included several unrated ETFs to be mindful of.
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Top Buy
Vanguard Dividend Appreciation ETF (VIG)
The first and only Top Buy ETF is the Vanguard Dividend Appreciation ETF VIG. With top holdings consisting of companies such as WalmartWMT, MicrosoftMSFT, Procter & Gamble, Johnson & Johnson, and Visa, this ETF focuses on U.S. companies that have a track record of growing their dividends year over year. The company has $48,318,009,014.22 AUM, and has seen marginally positive fund flows. Its 90-day fund flow is $1,056,561,616.89, its 30-day fund flow is $284,487,778.82, and its 1-week fund flow is $71,427,992.86. Its net expense ratio of .08% is very reasonable.
The first of the Neutral rated Top Dividend ETFs, is the iShares Core Dividend Growth ETF DGRO. This ETF aims to track an index composed of U.S. stocks that have a proven history of growing dividends consistently. Its top holdings include companies such as VerizonVZ, Microsoft, Johnson and JohnsonJNJ, AppleAAPL, and JP Morgan. The ETF currently has $12,122,578,825.50 AUM, and has had consistently strong fund flows. It has a 90-day fund flow of $639,013,230.00, 30-day fund flow of $205,149,650.00, and 1-week fund flow of $90,079,890.00. Its net expense ratio of .08% is also very reasonable.
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WisdomTree U.S. Large Cap Dividend Fund (DLN)
Next on the list of Neutral rated Top Dividend ETFs, is the WisdomTree U.S. Large Cap Dividend Fund DLN. This ETF tracks an index made up exclusively of U.S. Large Cap companies that pay strong dividends. In terms of AUM, the ETF is on the smaller side with $2,310,115,315.74 AUM. The ETF has seen mixed fund flows, with a negative fund flow of $-256,476.65 over the last 90-days, a positive fund flow of $19,502,811.40 over the last 30-days, and a 1-week fund flow of $-33,125.90. Its net expense ratio of .28% is pricier compared to other similar ETFs.
ProShares S&P 500 Aristocrats ETF (NOBL)
Our final Neutral ETF for the month is the ProShares S&P 500 Aristocrats ETF NOBL. This is a very uniquely structured ETF because its only holdings are companies within the S&P 500 that have raised their dividends for at least 25 years in a row. This is a highly rated and highly respected ETF, with none of its top holdings holding any more than 2% of weight in the ETF. Its major holdings include stocks such as TargetTGT, SyscSYYo, Proctor and GambPGle, and Lowe’sLOW. The ETF is on the smaller side and currently has $6,317,158,648.76 AUM. It has had strong fund flows, with a $5,375,235.00 90-day fund flow, $11,020,235.00 30-day fund flow, and $7,449,730.00 1-week fund flow. Its 0.35% net expense ratio is pricier compared to other ETFs on this list.
Two more dividends on our list that were not assigned a rating are the iShares Core High Dividend ETF HDVand iShares Select Dividend ETF DVY. Both the iShares Core High Dividend ETF and iShares Select Dividend ETF focus on tracking an index of relatively high dividend paying U.S. stocks. While the iShares Core High Dividend ETF has $5,284,284,409.60 AUM, the iShares Select Dividend ETF has $12,803,355,921.60. Both ETFs have seen negative fund flows over the last 90-days, 30-days, and 1-week. The iShares Core High Dividend ETF saw fund flows of $-170,852,550.00 over the last 90-days, $-60,936,530.00 over the last 30-days, and $-20,221,055.00 over the last week, and the iShares Select Dividend ETF saw fund flows of $-581,999,285.00 over the last 90-days, $-177,570,940.00 over the last 30-days, and $-43,219,085.00 over the last week. The iShares Core High Dividend has a much better net expense ratio than the iShares Select Dividend ETF, with a ratio of 0.08% compared to 0.39%.
The next two dividends on our list that were not assigned a rating are the SPDR S&P Dividend ETF and Vanguard High Dividend Yield ETF VYM. While the SPDR S&P Dividend ETF focuses on the highest dividend yielding S&P stocks that have consistently increased dividends for at least 20 years in a row, the Vanguard High Dividend Yield ETF aims to hold high dividend paying U.S. companies, weighted by market cap. They do not, however, hold any REITS. The SPDR S&P Dividend ETF has $15,369,354,952.87 AUM, compared to $27,027,261,978.50 AUM for the Vanguard High Dividend Yield ETF. The SPDR S&P Dividend ETF has seen consistently negative fund flows, with a fund flow of $-466,148,196.10 over the last 90-days, $-171,567,910.65 over the last 30-days, and $-38,867,446.95 over the last week. In comparison, the Vanguard High Dividend Yield ETF has consistently positive fund flows with a 90-day fund flow of $465,326,085.22, 30-day fund flow of $200,611,929.40, and 1-week fund flow of $113,321,604.67. The SPDR S&P Dividend ETF has a considerably less attractive net expense ratio of 0.35% compared to the net expense ratio of 0.06% for the Vanguard High Dividend Yield ETF.
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WisdomTree U.S. Quality Dividend Growth ETF (DGRW)
One of the best run dividend ETFs in the world has the added advantage of paying monthly dividends. DGRW's focus on both quality and growth characteristics makes it ideally suited for most portfolios even though the dividend yield is on the lower end.
Yields: SPHD has a higher yield of 4.97%, while SCHD has a lower but respectable yield of 3.77%. This difference is by design, as SPHD focuses on high-yielding dividend stocks, while SPHD focuses on companies with a history of paying dividends.
It's easy to explain the popularity of high-dividend ETFs: High dividends equal high yields and a reliable cash flow. People who have current income as a primary investment objective are especially attracted to exchange-traded funds, or ETFs, that pay superior income, but dividends can be a boon to any investor.
Is there a dividend king ETF? There is no “king” of dividend ETFs, per se. To qualify as a dividend king, a stock must have increased its dividends consecutively for at least the past 50 years.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at.
Overall, SCHD is a better option if you are looking for a passively managed ETF with a low expense ratio and consistent performance over the last ten years. If you want an actively managed ETF with a high dividend yield over the last several years and a well-diversified portfolio, then JEPI is a better option.
The biggest driver of investor interest has been its strong and consistent track record. On an annual basis, almost like clockwork, SCHD has performed in the top 1/3 of its Morningstar category and had done so far a decade straight. That is, until 2023.
high yield for the VYM), the Schwab U.S. Dividend Equity ETF may be a better bet for investors that seek to invest for the long term and reinvest their dividends. The longer-term (10-year) performance comparison shows that the SCHD outperformed the VYM quite significantly on both a price and total return basis…
Dividend ETFs or Dividend Stocks: Which Is Better? Dividend ETFs can be a good option for investors looking for a low-cost, diversified and reliable source of income from their investments. Dividend stocks may be a better option for investors who prefer to choose their own investments.
VYM is a $63 billion dividend ETF with a 0.06% expense ratio and 3% expected dividend yield. Its 300+ holdings make it one of the best-diversified dividend funds available. VYM's 3% likely doesn't fit the definition of "high yield" for many income investors.
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