High Dividend ETFs Are Outperforming
The $Ishares Trust Ishares Core High Dividend (HDV.US)$ increased 4.0% year-to-date, compared to the 11.5% drop in the $S&P 500 Index (.SPX.US)$ .
The strength in high dividend-paying stocks has been unconventional since these types of investments usually do poorly in a rising interest rate environment. Rates typically go up in an expanding economy, and investors would usually forgo steady bond-esque stocks in favor of companies that would deliver higher returns.
Moreover, the dividend-paying strategy is also taking off due to the large exposure to the energy sector, which has been enjoying a stellar start to the year on the surging crude oil prices.
Oil-and-gas companies make up around 7.4% of the $Vanguard High Dividend Yield ETF (VYM.US)$, Jack Ablin, chief investment officer, and founding partner at Cresset Capital, pointed out. The energy sector has helped offset some losses in VYM, which is down 2.4% year-to-date.
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