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The Zacks Analyst Blog Highlights SMDV, SPHD, PEY, SPYD and DHS

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For Immediate Release

Chicago, IL – August 13, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. ETFs recently featured in the blog include: Russell 2000 Dividend Growers ETF (SMDV - Free Report) , Invesco S&P 500 High Dividend Low Volatility ETF (SPHD - Free Report) , Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) , SPDR Portfolio S&P 500 High Dividend ETF (SPYD - Free Report) and WisdomTree U.S. High Dividend Fund (DHS - Free Report) .

Here are highlights from Monday’s Analyst Blog:

5 Dividend ETFs Crushing the Market

Amid the growing anxiety about a slowing U.S. economy, geopolitical tensions and the looming November elections, the appeal for dividend investing has returned. This is especially true as this concern has led to a massive sell-off in the U.S. stock market, wiping out most of the gains made this year.

Traders are betting that the U.S. economy has lost steam and is on the verge of sliding toward a recession, given rising unemployment, high interest rates and fading confidence in the tech sector. The labor market cooled in July as the economy added 114,000 jobs, 35% fewer than expected. Unemployment rose to 4.3% — the highest since October 2021 — and represented the fourth consecutive monthly increase. U.S. manufacturing activity dropped to an eight-month low in July amid a slump in new orders.

Additionally, concerns that big technology companies' shares, particularly those investing heavily in artificial intelligence (AI), have been overvalued led to massive sell-offs in early August. Further, soft earnings of some of the "Mag 7" as well as other big corporate giants dampened investors' mood (read: Should You Buy the Dip in Tech ETFs?).

Per the latest CME FedWatch tool, traders are pricing in a 100% chance of a 50-bps cut in September. Lower interest rates generally lead to reduced borrowing costs, which help businesses expand their operations more easily, resulting in increased profitability. This, in turn, stimulates economic growth and provides a boost to the stock market.

Given this, investors have become defensive and shifted their focus to products that provide stability and safety in a rocky market. We have highlighted several reasons why dividend investing seems to be a viable strategy amid the market turmoil.

Income Generation: One of the primary benefits of dividend investing is the steady stream of income generated through dividend payouts.

Potential for Dividend Growth: Companies with a strong history of dividend growth may continue to increase the same over time. These are typically established, profitable companies that have the financial flexibility to increase dividends even during economic downturns. Their ability to grow dividends can be a sign of financial health, which might provide some level of protection in an uncertain market.

Defensive Nature: Dividend-paying stocks are often found in sectors considered "defensive," such as utilities, consumer staples and healthcare. These sectors can hold up better during economic downturns as they produce essential goods and services that are in demand regardless of economic conditions. Therefore, they may provide some level of stability in a portfolio when concerns start to build up (read: 5 ETF Strategies to Follow Amid the Current Market Turmoil).

Compounding Returns: Reinvesting dividends can significantly enhance the power of compounding and can lead to exponential growth over the long term.

Hedge Against Inflation: Dividend-paying stocks can also serve as a hedge against inflation. Companies that can pass on increased costs to customers can maintain or even increase their profitability during inflationary periods, which can support their ability to pay dividends.

ETFs to Bet On

We have highlighted five dividend ETFs that are clearly outpacing the broad market indices by wide margins over the past month and are considered solid options for investors searching for some returns in uncertain markets.

Russell 2000 Dividend Growers ETF

Russell 2000 Dividend Growers ETF is the only ETF focusing exclusively on the best dividend growers in the Russell 2000. This includes quality companies that have not just paid dividends but grown them for at least 10 consecutive years. SMDV holds 101 stocks in its basket, with the highest allocation of 30% in the financial sector, followed by 22.3% in industrials and 18.2% in utilities. Russell 2000 Dividend Growers ETF has AUM of $685.4 million and charges 40 bps in annual fees. It has a Zacks ETF Rank #3 (Hold).

Invesco S&P 500 High Dividend Low Volatility ETF

Invesco S&P 500 High Dividend Low Volatility ETF offers exposure to 51 stocks trading on the S&P 500 Index that historically have provided high dividend yields and low volatility. It follows the S&P 500 Low Volatility High Dividend Index. Invesco S&P 500 High Dividend Low Volatility ETF is widely spread across sectors, with utilities, consumer staples, real estate and healthcare receiving double-digit exposure each. Invesco S&P 500 High Dividend Low Volatility ETF has amassed $3.3 billion and charges 30 bps in annual fees. It has a Zacks ETF Rank #3.

Invesco High Yield Equity Dividend Achievers ETF

Invesco High Yield Equity Dividend Achievers ETF offers exposure to well-diversified 51 stocks selected principally based on dividend yield and consistent growth in dividends. It tracks the NASDAQ US Dividend Achievers 50 Index, charging 51 bps in fees from investors. Financials, utilities, and consumer staples are the top three sectors accounting for double-digit exposure each. Invesco High Yield Equity Dividend Achievers ETF has amassed $1.2 billion in AUM and has a Zacks ETF Rank #3.

SPDR Portfolio S&P 500 High Dividend ETF

SPDR Portfolio S&P 500 High Dividend ETF provides exposure to stocks with a high level of dividend income and the opportunity for capital appreciation by tracking the S&P 500 High Dividend Index. Holding 80 stocks in its basket, the fund has key holdings in real estate, utilities, financials, and consumer staples. SPDR Portfolio S&P 500 High Dividend ETF has AUM of $6.2 billion. It charges 7 bps in annual fees and has a Zacks ETF Rank of #2 (Buy) (read: Time to Buy High-Dividend ETFs?).

WisdomTree U.S. High Dividend Fund

WisdomTree U.S. High Dividend Fund offers exposure to U.S. high dividend-yielding companies by tracking the WisdomTree U.S. High Dividend Index. It holds 376 stocks in its basket, with key holdings in financials, energy, utilities, consumer staples and healthcare. WisdomTree U.S. High Dividend Fund has amassed $1.1 billion in its asset base. It charges 38 bps in fees per year and has a Zacks ETF Rank #3.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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