Key Takeaways
- Dividend ETF strategies may be a place to watch right now.
- Investors have options like SPHD, which has outperformed the S&P 500 recently.
- The ETF wrapper’s tax efficiency could help get that income.
Dividends – they always seem to find their way back into investors’ considerations. Especially as volatility and uncertainty crest on the horizon amid an increasingly complicated U.S.-Israel-Iran conflict, adding that current income could prove a shrewd move. The dividend ETF SPHD has been a standout Q1 performer, making it a notable option.
See more: Active ETFs Again Set AUM Record in February
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD ) charges a 30 basis point fee for its approach. The dividend ETF tracks the S&P Low Volatility High Dividend index, seeking stocks offering major dividends and limited turbulence. That combination may prove particularly useful as markets face a Middle East situation that could easily spiral, should U.S. forces launch a ground invasion following significant energy infrastructure damage.
According to Benedek Vörös, director of index investment strategy at S&P Dow Jones Indices, the ETF surged 6.5% in the first quarter. It outpaced the S&P 500 by more than 10% — the largest outperformance margin since March 2021.
“Looking at the index’s sector over- and under-weights relative to the S&P 500, as well as the total excess performance generated from stock selection and allocation within each GICS® sector, we find that the index’s selections produced positive excess performance in eight out of 11 sectors, indicating wide breadth of contributors to the factor’s outperformance rather overemphasis on one or a handful of stocks making the difference,” he wrote.
According to ETF Database data, the dividend ETF has returned 7.1% over the last five years. This performance topped the ETF Database Volatility Hedged Equity Category average for the period. The fund has also added more than $100 million in AUM over the last three months, according to ETF Database data.
What’s more, according to YCharts data, SPHD’s price is in a good place, making now a potential buying opportunity. According to Invesco data, the ETF has provided a 4.3% 12-month distribution rate as of March 31st. Looking ahead, it’s clear volatility is in the cards. With the SPHD dividend ETF, investors have a strong option to outperform and add income.
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