For July 2022, the Best Dividend ETFs

For July 2022, the Best Dividend ETFs ...

Dividend stocks resurrected in July, as investors returned with a sense of optimism. After selling throughout most of 2022, investors began to suspect inflation might be peaking, the Federal Reserve might be approaching the end of its rate rise cycle, and corporate earnings might not be as bad as previously anticipated.

This month's dividend stocks fell short of the general average. Previous leaders, including high yielders, fell by around 4%, but dividend growth and dividend quality performed well by 1-2%. But that doesn't mean that there weren't any winners to be had. Many of the month's biggest winners came from smaller and less-known issuers.

One trend that we did see play out in July was the return of riskier dividend strategies. ETFs that focused on mid-cap and small-cap dividend payers tended to perform quite well, while sector plays, including those focusing on the financials and real estate sector, performed exceptionally well in July. Dividend payer strategies that took a little more risk similarly followed.

Dividend stocks have only really matched the market over the previous two months after outperforming the market for much of the first half of 2022. With the recession looming, I'd expect dividend stocks to return to their previous ways in the second half of the year. However, the relative security of companies backed by strong balance sheets and stable cash flows should be particularly attractive.

Here's a list of the best dividend ETFs for July 2022.

Dividend ETFs with the Best Performance in July 2022

The funds that raised 10% more than the 10% return mark this month are the ProShares S&P Technology Dividend Aristocrats ETF (TDV), the First Trust SMID Cap Rising Dividend Achievers ETF (RNSC), the Siren DIVCON Leaders Dividend ETF (LEAD), and the Dimensional U.S. Small Cap Value ETF (DFSV).

TDV, not surprising, is up a whopping 7% year on year and the S&P 500 by more than 2%. KBWD is highly volatile due to its high allocations to mortgage REITs and custody companies, but tends to be a leader when REITs and financials perform well (its 10% yield also helps).

Given the difficult circumstances, REIT ETFs performed superbly, including a failing Chinese real estate sector and a declining housing market in the United States. It's followed by two REIT ETFs that focus on the highest of high yielders - The Global X SuperDividend REIT ETF (SRET) and the Invesco KBW Premium Yield Equity REIT (KBWY), which both yield about 7% currently.

The AAM Bahl & Gaynor Small/Mid Cap Income Growth ETF (SMIG) has landed in the top 15, with its actively managed fund focusing on companies that have competitive advantages, under-appreciated capabilities, and robust dividend and cash flow growth. It has already over $100 million in assets, so it's getting some attention.

The WisdomTree International Quality Dividend Growth ETF (IQDG) is one of the most well-known and popular WisdomTree U.S. Quality Dividend Growth ETF (DGRW) rankings in July. It's a robust yielding of around 3% and it's light volatility.

Other ETFs Worth Noting:

None of the most well-known dividend ETFs make this month's cut. The SPDR Russell 1000 Yield Focus ETF (ONEY) is the only ETF that shows up in the top 10 of my dividend ETF rankings, where it currently stands at #8.

The funds at the top of this list have sister ETFs that follow similar methodologies but are targeting different markets. RNSC is focused on small-caps, but there is also the First Trust Large-Cap U.S. Equity Select ETF (RNLC) that follows. All three funds performed extremely well in July, demonstrating that the funds' core targeting strategies performed admirably.

The Siren DIVCON Leaders Dividend ETF (LEAD) and the VictoryShares Dividend Accelerator ETF (VSDA) are two funds that have previously been highlighted on this list in 2022. Both focus on dividend growth and quality.

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