{"id":3678,"date":"2023-10-20T12:57:22","date_gmt":"2023-10-20T12:57:22","guid":{"rendered":"https:\/\/infundpros.com\/markets\/bonds-prices-are-slumping-again-consider-these-dividend-stock-etfs-instead\/"},"modified":"2023-10-20T12:57:22","modified_gmt":"2023-10-20T12:57:22","slug":"bonds-prices-are-slumping-again-consider-these-dividend-stock-etfs-instead","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=3678","title":{"rendered":"Bonds Prices Are Slumping Again. Consider These Dividend Stock ETFs Instead."},"content":{"rendered":"<div id=\"js-article__body\" itemprop=\"articleBody\" data-sbid=\"WP-BAR-0000774612\">\n<div data-layout=\"wrap\n              \" data-layout-mobile=\"\" class=\"\n        media-object\n        type-InsetMediaIllustration\n          wrap\n  article__inset\n        article__inset--type-InsetMediaIllustration\n          article__inset--wrap\n    article__inset--lead\n  \"><\/p>\n<p>        <!-- eventually when we know what this card will be we can change it and leave this one --><\/p>\n<figure class=\"\n        media-object-image\n        enlarge-image\n        img-wrap\n        article__inset__image\n      \" itemscope=\"\" itemtype=\"http:\/\/schema.org\/ImageObject\"><\/p>\n<\/figure><\/div>\n<p>Surging bond yields are great for investors looking for income, but a drag for those who already hold bonds in their portfolios, as bond prices fall as yields rise. Dividend funds are a good alternative for income hunters.\u00a0\u00a0<\/p>\n<p>Bond yields have been climbing, after a decade at near-zero levels. The 10-year Treasury note\u2019s yield is approaching 5% for the first time since July 2007.<\/p>\n<div class=\"paywall\">\n<p>Morningstar has upgraded the process ratings on four dividend exchange-traded funds, giving investors who want the regular income that dividend stocks provide a leg-up in choosing investments.<\/p>\n<p>\u201cIf interest rates continue higher, if inflation picks up, it could be a brutal time to be in bonds,\u201d said Bryan Armour, director of passive strategies research for North America at Morningstar Research Services. \u201cAnd likewise, the opposite could happen. So it\u2019s always good to have multiple sources of income and, in general, having the stock exposure with it will lead to better long-term total returns than bonds historically.\u201d<\/p>\n<p>The funds include the<br \/>\n        Schwab U.S. Dividend Equity<br \/>\n       ETF (ticker: SCHD);<br \/>\n        Vanguard High Dividend<br \/>\n      Yield ETF (VYM);<br \/>\n        Vanguard Dividend Appreciation<br \/>\n       ETF (VIG); and<br \/>\n        Vanguard International Dividend Appreciation<br \/>\n       ETF (VIGI).<\/p>\n<p>The ETFs are \u201cbest in class,\u201d Armour said. \u201cThese four strategies do a really good job, not only of identifying different types of dividend companies, but also they\u2019re very strong equity portfolios in their own right.\u201d<\/p>\n<p>The Schwab U.S. Dividend Equity ETF has a 12-month dividend yield of 3.7%. The \u200b\u200bstrategy looks for companies with a long record of paying dividends and solid yield expectations, then scores them on a series of quality metrics.<\/p>\n<p>The portfolio holds 100 stocks, with<br \/>\n        Amgen<br \/>\n       (AMGN),<br \/>\n        Broadcom<br \/>\n       (AVGO),<br \/>\n        AbbVie<br \/>\n       (ABBV),<br \/>\n        Chevron<br \/>\n       (CVX), and<br \/>\n        Merck<br \/>\n       &amp; Co (MRK) in the top five. \u201cIt\u2019s pretty well-balanced between different sectors,\u201d added Amour. \u201cThe tech stocks have obviously done better than healthcare, for example.\u201d<\/p>\n<p>Over 10 years, the fund delivered total annualized returns of 10.79%, placing it in the top one percentile of category peers funds, meaning it outperformed the other 99%. And it has done so with below-average volatility, according to Morningstar. The fund currently ranks as the top ETF in its category by 10-year Sharpe ratio, a measure of risk-adjusted return.\u00a0<\/p>\n<p>The Vanguard High Dividend Yield ETF has a 12-month dividend yield of 3.25%. It starts with all U.S. large- and mid-cap stocks, excluding real estate investment trusts, and ranks them by their expected dividend yield over the next year. It then selects the higher-yielding half of eligible dividend-paying stocks and weights them by market capitalization.\u00a0<\/p>\n<p>\u201cit\u2019s a really simple approach that is very effective at leveraging the market\u2019s pricing of the different stocks,\u201d said Armour. The market-cap weighting inclines the portfolio toward larger, more stable stocks.<\/p>\n<p>\u201cIf there are value traps that make their way through the portfolio, it holds over 450 stocks, so they\u2019re not going to be that impactful,\u201d he added. \u201cAlso if the price is falling, they\u2019re going to actually become a lower and lower percentage of the portfolio. And that has really helped it steer clear of some of the risks of dividend and value investing.\u201d<\/p>\n<p>Total annualized returns of 9% over 10 years place the fund in the top quartile of its peers.<\/p>\n<p>The Vanguard Dividend Appreciation ETF and Vanguard International Dividend Appreciation ETF share the same strategy in different geographies.<\/p>\n<p>Both look for companies with a 10-year history of increasing dividend payments, not just making dividend payments. \u201cThat narrows the pool to high-quality, stable businesses,\u201d said Armour. The Vanguard Dividend Appreciation ETF has a 12-month dividend yield of 2.04%, while its international sibling yields 2.24%.<\/p>\n<p>Write to Lauren Foster at lauren.foster@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.marketwatch.com\/articles\/bond-yields-prices-dividend-stocks-etfs-e9a7e35a?mod=markets\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Surging bond yields are great for investors looking for income, but a drag for those who already hold bonds in their portfolios,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":3679,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-3678","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Bonds Prices Are Slumping Again. 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