During the first half of the year, there were only a few bright spots in the market - energy, commodities, and nothing else - but dividend stocks performed superbly on a relative basis. The WisdomTree U.S. Total Dividend ETF (DTD), which is a fairly good proxy for the entire dividend-paying stock universe, outperformed the S&P 500 by 10%. High yield ETFs, such as the Vanguard High Dividend Yield ETF (VYM), performed
As the global economy weakens, dividend stocks performed well against defensive stocks throughout the year.
Five dividend ETFs that managed to increase shareholder value despite the S&P 500's loss in the first half
Most ETFs on this list have high yield as part of their strategy, but there are a few other noticeable themes. In particular, low volatility stocks are a target in many funds. International dividend ETFs got an extra boost, but those that invested in global stock portfolios, combining the United States and foreign stocks, tended to have the advantage.
Here's a list of the best performing dividend ETFs for the first half of 2022.
The most effective dividend ETF of the first half was the WisdomTree U.S. High Dividend ETF (DHS), a fund that weights U.S. corporations with high yields by the aggregate cash dividends paid by them. These companies tend to be better equipped to keep paying them, thus adding a quality element to the portfolio.
The WisdomTree Japan Hedged Equity ETF (DXJ) and the WisdomTree Japan Hedged SmallCap Equity ETF (DXJS) were the most successful international funds of the first half.
Another couple of high-profile dividend ETFs have made it to the top 5. The iShares Core High Dividend ETF (HDV) is the seventh largest dividend ETF with $13 billion in assets. On a longer-term basis, this fund has struggled to keep up with many of its competitors, but over the past one year, it's been top-notch. The First Trust Morningstar Dividend Leaders Index ETF (FDL) is another top-tier fund.
When I can, I like to highlight the VictoryShares U.S. Large Cap High Dividend Volatility Weighted ETF (CDL) and the VictoryShares U.S. Equity Income Enhanced Volatility Weighted ETF (CDC). CDC is particularly interesting because it employs a risk-on/risk-off strategy on top of the core on. It reduces equity exposure as stocks are initially declining, but adds back at deeper loss levels.
Other ETFs to Keep an Eye on:
The Vanguard Dividend Appreciation ETF (VIG) and the Vanguard High Dividend Yield ETF (VYM) did not make the top 30. In fact, neither was particularly close: VYM lost 8%, and VIG fell more than 15%.
The Invesco S&P 500 High Dividend Low Volatility ETF (SPYD), the iShares Select Dividend ETF (DVY) and the ALPS Sector Dividend Dogs ETF (SDOG) were among the best dividend ETFs on the 1st half list.
Another one of my favorites - the Invesco High Yield Equity Dividend Achievers ETF (PEY) - had a good first half. While the high yield piece is what drove returns, I've always liked the idea of targeting the highest yielders from the long-term dividend grower group.
The Pacer Global Cash Cows Dividend ETF (GCOW) deserves a mention. It has pretty consistently topped monthly top performer lists but has narrowed out of staying in the green. Pacer's cash cows lineup, which targets corporations that generate the highest free cash flow yields, has been proven to work well over the long term, but the market's focus on growth stocks has diminished its effectiveness.