In this article, we discuss 10 dividend ETFs for 2022. If you want to skip our detailed analysis of these stocks, go directly to 5 Dividend ETFs for 2022.
Investors who seek exposure to dividend stocks and a diversified portfolio often resort to dividend exchange traded funds. In a 2018 interview with CNBC, legendary value investor Warren Buffett reiterated the importance of holding an index funds. He believes these funds are a suitable option for amateur investors who want to avoid risks and diversify their portfolios.
During the COVID-19 pandemic, 114 companies in the S&P 500 Index suspended guidance when they were only 60% through the earnings season, 79 companies suspended buybacks, and several businesses cut dividends altogether.
ETFs provide a great way to diversify your portfolios and also secure decent yields. Dividend ETFs with quality stocks like Apple Inc. (NASDAQ:AAPL), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO) are likely to outperform the funds that only chase yields instead of sustainable payout ratios, financial stability, and the consistency of dividend increases.
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Our Methodology
We selected dividend ETFs listed on the United States exchanges that deliver attractive yields, hold diversified stocks, and closely follow the annualized returns of their benchmarks. We also ensured that most of the chosen exchange traded funds held quality stocks that are popular with elite hedge funds and have a rich dividend history. We also selected a few small-cap dividend ETFs which performed well in 2021.
Dividend ETFs for 2022
10. VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC)
VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC) is an exchange traded fund that tracks the performance of the Nasdaq Victory US Large Cap High Dividend 100 Long/Cash Volatility Weighted Index, abbreviated as the Long/Cash Index, before fees and expenses are considered. The Long/Cash Index strategically reduces its exposure to equity markets during periods of sharp declines and reinvests capital when market prices have either declined further or are on an upwards trajectory, showing the recovery potential of a company.
At the end of 2021, VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC)’s annualized returns equaled 33.08%, closely tracking the Long/Cash Index, which stood at 33.62%. VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC) tracks the movement of 102 stocks, which are mostly concentrated in the consumer staples, financials, utilities, healthcare, and information technology sectors.
VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC) exposes investors to some of the top dividend paying stocks, including PepsiCo, Inc. (NASDAQ:PEP), The Coca-Cola Company (NYSE:KO), Verizon Communications Inc. (NYSE:VZ), Costco Wholesale Corporation (NASDAQ:COST), and Johnson & Johnson (NYSE:JNJ). The top ten holdings concentration is 14.60% of the total portfolio.
9. SPDR S&P Dividend ETF (NYSE:SDY)
The investments at SPDR S&P Dividend ETF (NYSE:SDY) track the S&P High Yield Dividend Aristocrats Index, which selects companies from the S&P Composite 1500 Index constituents that have been increasing their dividends consistently for at least 20 years back-to-back. The stocks mirrored by SPDR S&P Dividend ETF (NYSE:SDY) thus have capital growth prospects and stable dividend income, rather than purely an attractive yield. SPDR S&P Dividend ETF (NYSE:SDY) holds 114 stocks in its portfolio.
SPDR S&P Dividend ETF (NYSE:SDY)’s annualized yearly returns on December 31, 2021 equaled 25.41%, closely following the returns of the S&P High Yield Dividend Aristocrats Index, which came in at 25.85%.
The top holdings at SPDR S&P Dividend ETF (NYSE:SDY) included AT&T Inc. (NYSE:T), Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), International Business Machines Corporation (NYSE:IBM), and Chevron Corporation (NYSE:CVX). The smart money is also bullish on these stocks individually, which makes SPDR S&P Dividend ETF (NYSE:SDY) one of the top dividend ETFs for 2022.
On December 20, SPDR S&P Dividend ETF (NYSE:SDY) declared a quarterly distribution of $0.9698, payable on December 22 to shareholders of record on December 20. As of January 21, SPDR S&P Dividend ETF (NYSE:SDY) offers a dividend yield of 2.71%.
The exchange traded fund holds many notable stocks with rich dividend histories, just like Apple Inc. (NASDAQ:AAPL), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO).
8. Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM)
Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) follows a full replication approach and mirrors the performance of the FTSE High Dividend Yield Index, which measures the investment return of companies that offer high dividend yields.
At the end of 2021, Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM)’s average annual returns came in at 26.14%, whereas the FTSE High Dividend Yield Index stood at 26.19%. Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM) holds 412 stocks, and the fund’s total net assets amount to $54.6 billion as of December 31.
With a top ten holdings concentration of 24.3%, the most notable stocks in the ETF include JPMorgan Chase & Co. (NYSE:JPM), The Home Depot, Inc. (NYSE:HD), The Procter & Gamble Company (NYSE:PG), Bank of America Corporation (NYSE:BAC), and Pfizer Inc. (NYSE:PFE), among others.
Vanguard High Dividend Yield Index Fund ETF Shares (NYSE:VYM), on December 20, declared a quarterly distribution of $0.9386, which was paid on December 23, eligible for shareholders of record on December 21.
7. Schwab U.S. Dividend Equity ETF (NYSE:SCHD)
Schwab U.S. Dividend Equity ETF (NYSE:SCHD) tracks as closely as possible the total return of the Dow Jones U.S. Dividend 100 Index, which ensures the quality and sustainability of dividends. The stocks are chosen based on their performance relative to competition in the industry and their financial ratios. Schwab U.S. Dividend Equity ETF (NYSE:SCHD) was initiated in 2011 and has 105 total holdings in its portfolio.
Annualized 1-year returns for Schwab U.S. Dividend Equity ETF (NYSE:SCHD) totaled 29.87% as of December 31, 2021, whereas the Dow Jones U.S. Dividend 100 Index returned 29.93% over the same period.
The most notable holdings of Schwab U.S. Dividend Equity ETF (NYSE:SCHD) include Merck & Co., Inc. (NYSE:MRK), BlackRock, Inc. (NYSE:BLK), Broadcom Inc. (NASDAQ:AVGO), and The Coca-Cola Company (NYSE:KO).
Notable elite hedge funds like Berkshire Hathaway, Renaissance Technologies, Arrowstreet Capital, and Citadel Investment Group are bullish on these stocks individually, which means exposure via Schwab U.S. Dividend Equity ETF (NYSE:SCHD) is a good idea for investors who are looking to diversify their portfolios, making it one of the top dividend ETFs for 2022.
6. Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD)
Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) primarily tracks the performance of the S&P 500 Low Volatility High Dividend Index, which includes 50 securities traded on the S&P 500 Index that have delivered high dividend yields and low volatility on a historical basis. Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) holds 49 stocks in its portfolio, with a market capitalization of $79.5 million as of December 31, 2021.
On December 20, Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) declared a monthly distribution of $0.1365, which was paid on December 31, to shareholders of record on December 21. As of January 21, the ETF offers a dividend yield of 3.19%.
At the end of 2021, the annualized 1-year returns for Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) came in at 25.11%, as compared to the S&P 500 Low Volatility High Dividend Index, which returned 25.26% over the same period. The holdings are primarily large-cap and mid-cap stocks.
Chevron Corporation (NYSE:CVX), Altria Group, Inc. (NYSE:MO), Philip Morris International Inc. (NYSE:PM), and Iron Mountain Incorporated (NYSE:IRM) are some of the top holdings of Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD). The dividend yields of these stock picks individually come in at over 4%, which means that Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) is a notable dividend ETF for investors heading into 2022.
Just like Apple Inc. (NASDAQ:AAPL), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO), Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) is a good option for income investors.
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Disclosure: None. 10 Dividend ETFs for 2022 is originally published on Insider Monkey.
