In this article, we discuss 10 dividend ETFs to buy in August. You can skip our detailed analysis of dividend ETFs and their performance, and go directly to read 5 Dividend ETFs to Buy in August.
Investing in dividend exchange-traded funds (ETFs) is a well-known strategy to generate a regular stream of income, especially in times of market uncertainty. These ETFs provide exposure to many dividend-paying stocks and are more convenient and safe as compared to individual stocks.
Dividend payouts have sharply increased this year from 2020 when many companies were forced to slash their payouts in recognition of the pandemic-related market turmoil. In the second quarter of 2022, dividends set another record as the S&P 500 companies paid out $140.6 billion in dividends, up from $137.6 billion in the previous quarter. In view of this, investors are also pouring money into dividend ETFs that mainly focus on stocks that increase or regularly pay dividends to shareholders. As of June 2022, dividend ETFs have taken in approximately $25 billion in assets and the number could reach $50 billion by the end of the year, according to Bloomberg Intelligence ETF analyst Eric Balchunas. He further mentioned that investors are supporting high-yield stocks as the Federal Reserve has raised interest rates and dividend ETFs are the best investment in this regard. At the end of June, the total assets of dividend ETFs amounted to over $338.5 billion with an average expense ratio of 0.52%, according to ETF.com.
Dividend ETFs are outperforming the S&P 500, which has lost 13.6% of its value in 2022 so far. For example, iShares Core High Dividend ETF, which tracks famous dividend stocks like Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ), is up 2.33% year-to-date and returned 7.23% in the past 12 months, as of the market close of August 8. Further evaluating these arguments, we will discuss the best dividend ETFs to buy in August.
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Our Methodology:
The ETFs mentioned in the list invest mainly in high-quality dividend stocks that offer attractive yields to investors. The major holdings of these ETFs are also mentioned to provide an in-depth analysis of these funds.
Dividend ETFs to Buy in August
10. Vanguard Dividend Appreciation Index Fund (NYSE:VIG)
Vanguard Dividend Appreciation Index Fund (NYSE:VIG) follows a passively-managed and full replication approach. The fund tracks the performance of dividend stocks that hold strong records of growing their payouts. At the end of June, the fund’s total assets amounted to over $71.3 billion. It tracks the movement of 289 dividend stocks, mainly belonging to consumer staples, energy, healthcare, and financial sectors.
At the end of 2021, Vanguard Dividend Appreciation Index Fund (NYSE:VIG) delivered a 23.5% total return by the market price. Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG), and The Home Depot, Inc. (NYSE:HD) are some of the fund’s major holdings, with the top 10 holdings representing 29.8% of the portfolio.
Vanguard Dividend Appreciation Index Fund (NYSE:VIG) started paying dividends in 2021 and declared a quarterly dividend of $0.69390 per share, up from $0.51310 in March 2021.
Just like Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), and Johnson & Johnson (NYSE:JNJ), The Procter & Gamble Company (NYSE:PG) is also one of the prominent dividend stocks grabbing investors’ attention in 2022.
9. Vanguard High Dividend Yield Index Fund (NYSE:VYM)
Vanguard High Dividend Yield Index Fund (NYSE:VYM), launched and managed by the Vanguard Group, tracks the performance of stocks that have above-average dividend yields. Since its inception in 2006, the fund delivered an 8.20% return to shareholders. As of the end of June, the fund’s total assets came in at $55.6 billion and it has an earnings growth rate of 11%. The fund’s portfolio has 443 dividend stocks belonging to the financial, healthcare, and industrial sectors.
Chevron Corporation (NYSE:CVX) is one of the fund’s most prominent holdings, representing 2.12% of its portfolio. The energy company has a 35-year track record of consistent dividend growth, with a 5-year CAGR of 5.07%. The company pays a quarterly dividend of $1.42 per share, with a dividend yield of 3.64%, as of August 9.
At the end of Q1 2022, 53 hedge funds in Insider Monkey’s database owned stakes in Chevron Corporation (NYSE:CVX), the same as in the previous quarter. These stakes are collectively valued at nearly $28 billion. With a stake worth roughly $26 billion, Berkshire Hathaway was the company’s leading shareholder in Q1.
Diamond Hill Capital mentioned Chevron Corporation (NYSE:CVX) in its Q1 2022 investor letter. Here is what the firm has to say:
“Other top contributors in Q1 included multinational energy company Chevron Corp. (NYSE:CVX). The company benefited from increased energy demand as COVID-related economic restrictions eased in tandem with concerns regarding supply interruptions related to Russia’s invasion of Ukraine.”
8. Schwab U.S. Dividend Equity ETF (NYSE:SCHD)
Schwab U.S. Dividend Equity ETF (NYSE:SCHD) holds a modified market-cap-weighted portfolio of dividend stocks that have solid fundamentals. The fund focuses on stocks that have high-quality and sustainable dividends and also considers other financial ratios of such companies. As of August, the fund has a total of 104 holdings while its total net assets amounted to over $37.2 billion.
PepsiCo, Inc. (NASDAQ:PEP) is one of the major holdings of Schwab U.S. Dividend Equity ETF (NYSE:SCHD), accounting for 4.34% of its portfolio. The company pays a quarterly dividend of $1.15 per share, with a dividend yield of 2.63%, as of August 9. PepsiCo, Inc. (NASDAQ:PEP) has one of the strongest dividend growth records in the market, raising its payouts consistently for the past 49 years.
As of the end of Q1 2022, 62 hedge funds in Insider Monkey’s database owned stakes in PepsiCo, Inc. (NASDAQ:PEP), up from 60 in the previous quarter. These stakes hold a consolidated value of over $4.8 billion.
ClearBridge Investments mentioned PepsiCo, Inc. (NASDAQ:PEP) in its Q4, 2021 investor letter. Here is what the firm said:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year. After a strong year for equities, we sought to bolster more defensive areas of the portfolio and added to PepsiCo, increasing our exposure to a high-quality and stable name.”
7. iShares Select Dividend ETF (NASDAQ:DVY)
iShares Select Dividend ETF (NASDAQ:DVY) tracks the performance of an index composed of relatively high dividend US equities. The fund mainly focuses on stocks that have raised their dividends for over five years. In the past year, the fund gained 3.90% while its 5-year return came in at 33.2%, as of the market close of August 8. iShares Select Dividend ETF (NASDAQ:DVY) has total assets worth over $21.7 billion as of August and has 99 dividend stocks in its portfolio. The fund’s 12-month trailing yield stands at 3.08%, as of June 30.
Altria Group, Inc. (NYSE:MO) is the largest holding of iShares Select Dividend ETF (NASDAQ:DVY), accounting for 2.15% of the fund’s portfolio. The tobacco manufacturer has been raising its dividends consistently for the past 52 years. It offers a quarterly dividend of $0.90 per share and has an above-average yield of 8.15% in the industrial sector, as recorded on August 9.
The number of hedge funds tracked by Insider Monkey owning stakes in Altria Group, Inc. (NYSE:MO) stood at 47, growing from 39 in the previous quarter. These stakes are collectively valued at nearly $2 billion. Among these hedge funds, Rajiv Jain’s GQG Partners owned the largest stake in the company.
6. VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC)
Founded in 2014, VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC) tracks an index of 100 high-yield stocks belonging to the large-cap space. The average market cap of the fund’s holdings stood at $81.7 billion. The fund has over $2 billion worth of assets under management with an expense ratio of 0.35%. VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC) tracks the performance of 100 dividend stocks with the top 10 holdings making up 15.6% of its portfolio.
An American pharmaceutical company, Johnson & Johnson (NYSE:JNJ) is one of the prominent holdings of VictoryShares US EQ Income Enhanced Volatility Wtd ETF (NASDAQ:CDC). The company is famous among elite funds in Q1 2022, as 83 hedge funds tracked by Insider Monkey owned stakes in it, with a total value of over $7.4 billion. With a stake worth over $1.1 billion, Arrowstreet Capital was the company’s leading stakeholder in Q1.
Johnson & Johnson (NYSE:JNJ) is one of the most notable dividend stocks, as it holds a 60-year streak of consistent dividend growth. The company raised its dividend at a CAGR of 5.87% in the last five years. It offers a quarterly dividend of $1.13 per share, with a yield of 2.65%, as of August 9. In addition to JNJ, Exxon Mobil Corporation (NYSE:XOM) and AbbVie Inc. (NYSE:ABBV) also hold strong dividend growth track records.
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Disclosure. None. 10 Dividend ETFs to Buy in August is originally published on Insider Monkey.
