In this article, we discuss 10 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.
5. VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB)
VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB) is an exchange traded fund that allows investors to benefit from some of the highest yielding small-cap American stocks. The ETF was established in 2015, and tracks the performance of the Nasdaq Victory US Small Cap High Dividend 100 Volatility Weighted Index.
CSG Systems International, Inc. (NASDAQ:CSGS), Otter Tail Corporation (NYSE:OTTR), and Chesapeake Utilities Corporation (NYSE:CPK) are some of the most notable securities in the top ten holdings of VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB).
VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB)’s annualized 1-year returns as of December 31, 2021 came in at 27.23%, as compared to the Nasdaq index it tracks, which returned 28.05% for the year.
4. iShares Core High Dividend ETF (NYSE:HDV)
iShares Core High Dividend ETF (NYSE:HDV) is an exchange traded fund that tracks the performance of the Morningstar US Dividend Growth Index, which allows exposure to U.S. equities with a history of consistently growing dividends. As of January 21, iShares Core High Dividend ETF (NYSE:HDV) offers a dividend yield of 3.47%, and is one of the ETFs positioned for growth heading into 2022.
iShares Core High Dividend ETF (NYSE:HDV)’s top holdings from its portfolio of 418 stocks include Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), The Procter & Gamble Company (NYSE:PG), and Johnson & Johnson (NYSE:JNJ). These companies are also the top stock picks of elite hedge funds tracked by Insider Monkey.
As of December 21, iShares Core High Dividend ETF (NYSE:HDV)’s 1-year annual return totaled 26.64%, whereas the benchmark return equaled 26.69%. The fund’s expense ratio comes in at 0.08%.
3. ALPS Sector Dividend Dogs ETF (NYSE:SDOG)
The underlying index followed by ALPS Sector Dividend Dogs ETF (NYSE:SDOG) is the S-Network Sector Dividend Dogs Index. Holdings are screened and limited to those companies that offer a high dividend exposure from the five highest yielding securities in ten of the eleven GICS sectors, excluding real estate. ALPS Sector Dividend Dogs ETF (NYSE:SDOG) charges a management fee of 0.40%.
At the end of 2021, the 1-year annual return of ALPS Sector Dividend Dogs ETF (NYSE:SDOG) totaled 24.48%, while the benchmark returned 25% over the period.
AT&T Inc. (NYSE:T), Exxon Mobil Corporation (NYSE:XOM), Bristol-Myers Squibb Company (NYSE:BMY), and The Kraft Heinz Company (NASDAQ:KHC) are the most notable holdings of ALPS Sector Dividend Dogs ETF (NYSE:SDOG).
On December 22, ALPS Sector Dividend Dogs ETF (NYSE:SDOG) declared a $0.5213 per share quarterly dividend, which is a 7.7% increase from the prior dividend of $0.4841. The dividend was paid on December 29, to shareholders of record on December 23. As of January 21, ALPS Sector Dividend Dogs ETF (NYSE:SDOG) delivers a dividend yield of 3.60%, making it one of the top income generating ETFs heading into 2022.
2. Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY)
Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) tracks the performance of the NASDAQ US Dividend Achievers 50 Index, which consists of 50 stocks selected on the basis of dividend yield and successive growth in dividends.
As of December 30, Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) posted an annualized 1-year return of 26.20%, versus a benchmark return of 26.67%. The ETF holds 52 securities, which are a blend of large-cap, mid-cap, and small-cap companies. As of January 21, Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) provides shareholders with a dividend yield of 3.85%.
The top holdings of Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) consist of Altria Group, Inc. (NYSE:MO), Valero Energy Corporation (NYSE:VLO), and Philip Morris International Inc. (NYSE:PM).
Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY), on December 20, declared a monthly distribution of $0.0732, which was paid on December 30, to shareholders of record on December 21.
1. Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD)
Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD) is one of the highest yielding dividend ETFs heading into 2022. The exchange traded fund mirrors the performance of the KBW Nasdaq Financial Sector Dividend Yield Index, which is a dividend yield-weighted index of companies that primarily provide financial services and products.
Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD), on December 20, declared a monthly distribution of $0.1346. The dividend was paid on December 31, to shareholders of record on December 21. As of January 21, Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD) offers a dividend yield of 7.54%.
Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD) primarily invests in small-cap value, small-cap blend, and small-cap growth stocks. Of the 41 holdings in its portfolio, the top stocks include FS KKR Capital Corp. (NYSE:FSK), ARMOUR Residential REIT, Inc. (NYSE:ARR), Ellington Financial Inc. (NYSE:EFC), and Annaly Capital Management, Inc. (NYSE:NLY).
At the end of December 2021, Invesco KBW High Dividend Yield Financial ETF (NASDAQ:KBWD)’s annualized 1-year return came in at 31.94%, compared to the benchmark KBW Nasdaq Financial Sector Dividend Yield Index, whose returns totaled 32.18%.
You can also take a look at 10 Best Dividend Aristocrats to Buy for 2022 and 10 Dividend Stocks Billionaire D. E. Shaw is Buying.
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Disclosure: None. 10 Dividend ETFs for 2022 is originally published on Insider Monkey.
