ETF Edge: Todd Rosenbluth Talks Dividends and Retail

Inflation remains top of mind for many investors, especially with the Fed showing no signs of changing course despite the latest CPI numbers. With high interest rates eating into fixed income performance, investors have been seeking out dividends.

Amplify’s Amplify CWP Enhanced Dividend Income ETF (DIVO A-) has been in the top 5% of ETFs in terms of inflows, but a number of options are out there for investors seeking to pad their income. Rosenbluth noted both dividend income strategies and covered call strategies have been rousing investor interest this year. DIVO combines both strategies, but other options include Schwab US Dividend ETF (SCHD B+) the Vanguard High Dividend Yield ETF (VYM A) and the JPMorgan Equity Premium Income ETF (JEPI A). SCHD gives investors an index-based approach, while VYM focuses on high yields. JEPI, meanwhile, uses covered calls to help generate income. “It’s been one of the 10 most popular ETFs, JEPI, in 2022,” Rosenbluth noted.

According to Rosenbluth, recent surveys have revealed that, “instead of looking at it from an income component, that they’ve historically done in 2022 in a rising rate environment, they are now looking for more growth from these strategies.” Rosenbluth pointed toward the WisdomTree US Quality Dividend Growth ETF (DGRW A-) and the Vanguard Dividend Appreciation Index ETF (VIG A-) as possible beneficiaries as interest pivots from income toward growth.

A complex post pandemic has made the consumer staples space interesting. On one hand, the diminished attention paid to the ongoing global pandemic has people interested in the brick-and-mortar shopping experience. On the other hand, a dismal economic outlook could have many interested in the types of deals available online. Goldman Sachs recently noted that consumers are looking for value this year.

With Black Friday looming and holiday shopping season about to begin, a number of ETFs are worth looking at. The Amplify Online Retail ETF (IBUY C+) has had a rough year but is poised to do well as the holidays gear up. Rosenbluth noted that the Consumer Discretionary Select Sector SPDR Fund (XLY A) is the largest of the broad consumer staples ETF out there. “People tend to think of the consumer as being only tied to retail, and Amazon in the largest holding the XLY ETF, but you really need to understand that Tesla is a top holding, it’s the second largest one,” said Rosenbluth. Because of how broad XLY is, investors seeking a more targeted approach can look at the SPDR S&P Retail ETF (XRT B+) which is an equally weighted, primarily brick and mortar focused fund. According to Rosenbluth, “this ETF, XRT, has seen strong inflows this past month.” Meanwhile a more online concentrated approach can be found in the ProShares Online Retail ETF (ONLN B).

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