At a time when more focus is on growth and tech stocks – especially artificial intelligence (AI)-related stocks – dividend stocks are flying under the radar yet delivering solid performance. It’s always a good idea to have dividend stocks in your portfolio, but especially in times of market uncertainty.
there is no shortage of Dividend Stocks to ChooseBut I often recommend investing in dividend exchange-traded funds (ETFs). They may not have the high yields you see in some individual stocks, but they provide diversification and less risk.
If you’re looking for some dividend ETFs to add to your portfolio for the long term, consider the following two options. They are both dividend-focused, but in different ways.
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1. Schwab US Dividend Equity ETF
Schwab US Dividend Equity ETF (SCHD +0.23%) It has been a staple of dividend ETFs due to its focus on high-quality companies.
To be eligible for SCHD, a company must have consistent cash flow, profitability and dividend growth for 10 consecutive years. A company that checks those three boxes is generally financially healthy, so the ETF avoids situations where a company is included only because of high yield (which may not be sustainable).
Schwab US Dividend Equity ETF
today’s change
(0.23%) $0.07
current price
$30.87
key data points
day limit
$30.82 -$31.00
52wk range
$23.87 -$31.95
volume
31 m
SCHD consists of 101 stocks, with the top three represented sectors being energy (19.88%), consumer products (18.50%), and healthcare (16.20%). These sectors don’t typically get as much attention as sectors like technology, but they generate steady cash flow.
SCHD’s focus on high quality is paralleled by its four dividend king (Companies with continuous dividend growth for at least 50 years): Altria (4.08% of ETF) Coca Cola (3.93%), PepsiCo (3.88%), and Target (1.99%).
At the time of this writing, SCHD’s dividend yield is 3.4%, which is about equal to the average over the last five years.
SCHD Dividend Yield by data YCharts
2. Vanguard Dividend Appreciation ETF
vanguard dividend appreciation (wig +0.78%) Its yield is relatively low compared to SCHD and other dividend ETFs (1.6% at market close on March 11), but, as the name suggests, its focus is on companies that are actively increasing their dividend payouts. To be eligible for VIG, a company must increase its dividend for at least 10 consecutive years.
Vanguard Dividend Appreciation ETF
today’s change
(0.78%) $1.70
current price
$219.24
key data points
day limit
$218.60 -$219.94
52wk range
$169.32 -$230.53
volume
1.4m
One thing that stands out about VIG is that it holds more technology stock Higher than most dividend ETFs available on the market. The tech sector makes up over a quarter of the VIG, and that’s because many of these companies started paying dividends relatively recently, but fit the VIG’s framework to include companies committed to increasing their dividends.
Investors should be okay with VIG’s low dividend yield, assuming that its payout over the long term will be much higher than it is today. Over the past decade, payments have increased by more than 115%.
VIG Dividend by data YCharts
How much it grows over the next decade will ultimately depend on the companies’ specific growth over that time, but they have already shown a commitment to continued annual growth.