A Dividend ETF Investing Guide

Heightened volatility has shaken the stock market badly in recent months and pushed the S&P 500 on the brink of a bear market (down 18% from its peak early this year). The Nasdaq Composite Index is also in a bear market (down 22% below its record reached in August) while Dow Jones logged in its worst week since the financial crisis in 2008.

The combination of factors including lingering U.S.-China trade tensions, slowing economic growth in Europe and Japan, troubles in emerging markets, threats of global slowdown as well as slide in oil price have dampened demand for riskier assets.

The sell-off worsened following the Fed’s less-expected dovish move in the latest FOMC meeting and threats of an extended government shutdown. Even the holiday optimism has failed to drive the stocks higher, indicating that there is no signs of Santa Claus rally this year. The market turbulence pushed the S&P 500 to record its first annual loss in a decade while Dow Jones logged its worst year since 2008.

However, the American economy is on track this year to expand at the fastest pace in 13 years thanks to robust job creation, strong GDP growth, a 50-year low unemployment rate, solid wage gains, as well as rising consumer and business confidence. Against such a backdrop, nothing seems a better strategy than picking dividend-focused products.

Dividend-focused products offer safety in the form of payouts while at the same time providing stability as mature companies are less volatile to large swings in stock prices. Dividend-paying securities are the major source of consistent income for investors to create wealth when returns from the equity market are at risk. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.

Here, we have highlighted 10 most popular dividend ETFs for investors seeking yields and returns in a rocky market.

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