In a time of market volatility like the present, dividend stocks may provide a margin of safety. Investors can have confidence that many dividend-paying companies will have the wherewithal to continue returning cash to them and in some cases will regularly raise the dividend.
So it’s no wonder that for the year to date through Feb. 7, the S&P 500 High Yield Dividend Index, which includes the S&P 500’s 80 top dividend payers, returned 2.6% including dividends, creaming the 5.8% negative total return for the overall S&P 500, according to The Wall Street Journal.
As for investment possibilities, here are four of investment-research firm Morningstar’s medalist-rated dividend exchange-traded funds. The medalist funds earn gold, silver or bronze ratings, just like the Olympics.
Vanguard Dividend Appreciation ETF (VIG) – Get Vanguard Dividend Appreciation ETF Report is rated gold. The fund “focuses on quality franchises that have reliably increased the amount of cash they give back to shareholders over time,” Morningstar analyst Lan Anh Tran wrote in a commentary.
Vanguard Dividend Appreciation’s “stringent selection criteria yield a portfolio that balances income, capital appreciation, and risk,” she said.
“Thanks to [its] quality focus, a greater percentage of the portfolio is invested in stocks with a positive Morningstar economic moat rating than the Russell 1000 Index. This dials down risk and will give the fund an edge in rocky markets.”
The fund has a 12-month yield of 1.64%, according to Morningstar. The 12-month yield measures the sum of a stock’s trailing 12-month dividend payments divided by the last month’s ending share price plus any capital gains distributed during the period.
T. Rowe Price Equity Income ETF (TEQI) is rated silver. The fund’s “pedigreed team skillfully executes a balanced approach to equity income investing,” Morningstar analyst Linda Abu Mushrefova wrote in a commentary.
“The team applies a well-rounded approach to equity income investing that emphasizes yield, valuation, and fundamentals. [Fund manager…