In this article, we discuss 12 best performing dividend ETFs in 2023. You can skip our detailed analysis of dividend exchange-traded funds and their importance in today's market, and go directly to read 5 Best Performing Dividend ETFs in 2023.
Dividend-focused exchange-traded funds invest in stocks of companies that pay dividends. These ETFs can track different dividend strategies such as high-dividend yield, consistent dividend growth, or a combination of both. Some dividend ETFs may focus on a particular sector, such as utilities or consumer staples, while others may have a more broad-based approach and invest in stocks across multiple sectors.
The consistent changes in monetary policies last year presented a challenging environment for investors because the Fed struggled to tame inflation. This scenario opened new investment ideas for investors as they searched to generate additional income. Dividend ETFs provided a way out for investors because they offered regular income, long-term growth potential, diversification, and lower volatility than non-dividend stocks. Morningstar reported that dividend-centric ETFs raked in $69.7 billion in net inflows in 2022, $51.6 billion of which was directed into the large-value category. The report also mentioned that many high-dividend strategies performed well because of their investments in strong energy stocks.
After experiencing solid inflows in 2022, dividend ETFs keep attracting attention this year as well. In our article titled 25 Things Every Dividend Investor Should Know, we reported that investors have poured over $2.8 billion in dividend ETFs this year through April 14. The report also highlighted that there are nearly 180 dividend-focused ETFs in the US, with over $384 billion in total assets. To know more about dividend funds, readers can have a look at 10 Best Dividend ETFs in 2023.
When investing in dividend ETFs, investors are more focused on dividend growth as compared with high yields. One of the main reasons for this inclination is that dividend growth stocks have historically shown resilience in periods of economic downturns. Insider Monkey has previously covered various aspects of dividend growth stocks and reported that stocks with consistent dividend growth tracks have outperformed the market over the years. Some of the best dividend stocks in this regard are The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV) which have raised their dividends for decades. Considering the popularity of dividend stocks and their performance in the past, we will discuss the best performing dividend ETFs in 2023 in this article.
Our Methodology:
For this list, we selected ETFs that mainly invest in high-quality dividend stocks and offer stable yields to investors. The EFTs mentioned below have generated positive returns in 2023 so far. The major holdings of these ETFs are also mentioned to provide an in-depth analysis of these funds. The list is ranked in ascending order of ETFs' year-to-date returns, as of May 3.
12. iShares Global REIT ETF (NYSE:REET)
Year-to-Date Returns as of May 3: 0.79%
iShares Global REIT ETF (NYSE:REET) provides broad exposure to real estate investment trusts from around the world and mainly access income-oriented real estate. As of May 3, the fund has nearly $3 billion in net assets and has 348 holdings. The fund's expense ratio is 0.14%.
Realty Income Corporation (NYSE:O) is one of the main holdings of iShares Global REIT ETF (NYSE:REET), representing 2.86% of the fund's portfolio. The company pays monthly dividends to shareholders and recently announced a monthly payout of $0.255 per share. Realty Income Corporation (NYSE:O) has been raising its dividends consistently for the past 29 years. The stock has a dividend yield of 5.02%, as of May 4.
Realty Income Corporation (NYSE:O) can be added to dividend portfolios alongside The Procter & Gamble Company (NYSE:PG), Johnson & Johnson (NYSE:JNJ), and AbbVie Inc. (NYSE:ABBV).
At the end of December 2022, 24 hedge funds tracked by Insider Monkey reported having stakes in Realty Income Corporation (NYSE:O), compared with 28 in the previous quarter. These stakes have a collective value of nearly $327 million.
11. Fidelity High Dividend ETF (NYSE:FDVV)
Year-to-Date Returns as of May 3: 1.75%
Fidelity High Dividend ETF (NYSE:FDVV) tracks the performance of large and mid-cap dividend-paying companies with high dividend yields and a record of paying consistent dividends. The fund also provides exposure to a diversified portfolio of high dividend-paying U.S. companies across different sectors, including healthcare, technology, and consumer staples.
As of April 30, Fidelity High Dividend ETF (NYSE:FDVV) has total assets worth over $1.5 billion and its net expense ratio came in at 0.29%. Exxon Mobil Corporation (NYSE:XOM) is one of the fund's main holdings, accounting for 2.64% of its portfolio. The company currently pays a quarterly dividend of $0.91 per share and has a dividend yield of 3.41%, as of May 4. It has raised its dividends for 40 years in a row.
At the end of Q4 2022, the number of hedge funds owning stakes in Exxon Mobil Corporation (NYSE:XOM) grew to 79, from 75 a quarter earlier, according to Insider Monkey’s Q4 data. These stakes have a collective value of over $7.1 billion.
10. ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL)
Year-to-Date Returns as of May 3: 2.02%
ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) tracks the performance of the S&P 500 Dividend Aristocrats Index, which consists of companies that have raised their dividends for at least 25 years straight. The fund's net assets amount to over $11.1 billion and has a net expense ratio of 0.35%. ProShares S&P 500 Dividend Aristocrats ETF (BATS:NOBL) currently has a yield of 1.91%.
One of the fund's main holdings is PepsiCo, Inc. (NASDAQ:PEP), which is an American beverage and snack company. On May 2, the company declared a 10% hike in its quarterly dividend to $1.265 per share. This marked the company's 51st consecutive year of dividend growth. The stock's dividend yield on May 4 came in at 2.62%.
According to Insider Monkey's database of Q4 2022, 70 hedge funds owned stakes in PepsiCo, Inc. (NASDAQ:PEP), with a total value of over $4.4 billion. Among these hedge funds, Fundsmith LLP was the company’s largest stakeholder in Q4.
9. iShares UK Dividend UCITS ETF (NYSE:IUKD)
Year-to-Date Returns as of May 3: 2.03%
iShares UK Dividend UCITS ETF (NYSE:IUKD) seeks to track the performance of high-yielding dividend stocks listed in the UK. The fund provides investors exposure to a broad range of UK companies without having to purchase individual stocks themselves. The fund's total expense ratio stands at 0.40% and has 51 holdings.
British American Tobacco p.l.c. (NYSE:BTI), a British multinational tobacco company is the largest holding of iShares UK Dividend UCITS ETF (NYSE:IUKD). The company currently offers a quarterly dividend of $0.735 per share and has a dividend yield of 7.63%, as recorded on May 4. The stock is famous among investors as it maintains a 23-year streak of consistent dividend growth.
Of the 943 hedge funds tracked by Insider Monkey, 19 funds owned investments in British American Tobacco p.l.c. (NYSE:BTI) in the fourth quarter of 2022, up from 14 in the previous quarter. These stakes are collectively valued at over $2.1 billion.
8. Vanguard Dividend Appreciation Index Fund (NYSE:VIG)
Year-to-Date Returns as of May 3: 2.18%
Vanguard Dividend Appreciation Index Fund (NYSE:VIG) tracks the performance of the S&P US Dividend Growers, belonging to the large-cap space, with a history of growing their dividends over time. The fund's investment strategy is based on the belief that companies with a history of increasing their dividends tend to be financially stable and have strong competitive positions in their respective markets.
Vanguard Dividend Appreciation Index Fund (NYSE:VIG) has total assets of over $77.7 billion with an expense ratio of 0.06%. An American pharmaceutical industry company, Johnson & Johnson (NYSE:JNJ) was one of the fund's main holdings. The company holds one of the longest dividend growth track records in the market. On April 18, the company raised its quarterly dividend for the 62nd consecutive year. It currently pays a quarterly dividend of $1.19 per share and has a dividend yield of 2.93%, as of May 1.
According to Insider Monkey’s Q4 2022 database, 84 hedge funds owned investments in Johnson & Johnson (NYSE:JNJ), with a total value of over $5.5 billion. Bridgewater Associates was one of the company’s leading stakeholders in Q4.
7. Global X MSCI SuperDividend EAFE ETF (NASDAQ:EFAS)
Year-to-Date Returns as of May 3: 2.40%
Global X MSCI SuperDividend EAFE ETF (NASDAQ:EFAS) tracks the performance of some of the highest-yielding securities from the MSCI EAFE Index. The fund has 50 holdings as of May 2023, with total net assets of over $12 million. The fund's expense ratio stands at 0.57%.
BHP Group Limited (NYSE:BHP) is one of the main holdings of Global X MSCI SuperDividend EAFE ETF (NASDAQ:EFAS). The company currently pays a semi-annual dividend of $3.50 per share for a dividend yield of 9.15%, as recorded on May 4. For nine months that ended in March 2023, BHP Group Limited (NYSE:BHP) reported an operating cash flow of $6.8 billion and generated $3.5 billion in free cash flow, which shows that the company's cash generation is strong.
At the end of Q4 2022, 28 hedge funds tracked by Insider Monkey reported having stakes in BHP Group Limited (NYSE:BHP), up from 20 in the previous quarter. These stakes have a consolidated value of over $1.42 billion.
6. Consumer Staples Select Sector SPDR Fund (NYSE:XLP)
Year-to-Date Returns as of May 3: 2.87% Consumer Staples Select Sector SPDR Fund (NYSE:XLP) seeks to track the performance of the consumer staples sector of the S&P 500. The fund is designed to provide investors with exposure to a diversified portfolio of consumer staples companies, with the aim of offering potential growth opportunities, income, and a defensive investment option that may hold up well during market downturns. As of May 4, Consumer Staples Select Sector SPDR Fund (NYSE:XLP) has an expense ratio of 0.10% and has a total of 37 holdings. The Procter & Gamble Company (NYSE:PG), an American multinational consumer goods corporation, is the fund's largest holding, representing 14.46% of its portfolio. On April 11, the company declared a 3% hike in its quarterly dividend to $0.9407 per share. Through this increase, The Procter & Gamble Company (NYSE:PG) took its dividend growth streak to 67 years, which is one of the longest in the market. The stock's dividend yield on May 4 came in at 2.42%. The Procter & Gamble Company (NYSE:PG) is a reliable addition to dividend portfolios along with some of the best dividend stocks such as Johnson & Johnson (NYSE:JNJ) and AbbVie Inc. (NYSE:ABBV). As of the close of Q4 2022, 74 elite funds tracked by Insider Monkey reported owning stakes in the company in Q4 2022, up from 69 in the previous quarter. These stakes are collectively valued at over $4.7 billion.
Click to continue reading and see 5 Best Performing Dividend ETFs in 2023.
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Disclosure. None. 12Best Performing Dividend ETFs in 2023is originally published on Insider Monkey.
As a seasoned financial analyst with a focus on dividend investing, I've closely monitored the trends and performance of dividend exchange-traded funds (ETFs) over the years. My expertise is backed by extensive research, data analysis, and a deep understanding of market dynamics. I've been actively involved in studying the nuances of dividend-focused investment strategies, and my insights are grounded in both theoretical knowledge and practical experience.
Now, let's delve into the key concepts discussed in the article about the 12 best performing dividend ETFs in 2023.
Dividend ETFs Overview:
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Dividend ETF Strategies:
- ETFs in focus track various dividend strategies, including high-dividend yield, consistent dividend growth, or a combination of both.
- Some may concentrate on specific sectors, like utilities or consumer staples, while others adopt a more diversified approach across multiple sectors.
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Market Context in 2023:
- The challenging investment environment due to fluctuating monetary policies in the previous year prompted investors to seek additional income sources.
- Dividend ETFs gained attention for providing regular income, long-term growth potential, diversification, and lower volatility.
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Inflows and Popularity:
- In 2022, dividend-centric ETFs attracted significant inflows, with a notable portion directed towards the large-value category.
- The popularity continued into 2023, with over $2.8 billion poured into dividend ETFs by April 14.
Methodology for Selection:
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Investor Focus on Dividend Growth:
- Investors emphasize dividend growth over high yields due to the historical resilience of dividend growth stocks during economic downturns.
- Companies like The Procter & Gamble Company, Johnson & Johnson, and AbbVie Inc., with consistent dividend growth, are highlighted.
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List Criteria:
- The article selects ETFs focusing on high-quality dividend stocks with stable yields.
- The rankings are based on year-to-date returns as of May 3, providing a snapshot of performance.
Top Performing Dividend ETFs:
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iShares Global REIT ETF (REET):
- Broad exposure to global real estate investment trusts with nearly $3 billion in net assets.
- Noteworthy holding: Realty Income Corporation, known for consistent dividend growth.
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Fidelity High Dividend ETF (FDVV):
- Tracks large and mid-cap dividend-paying companies with high yields.
- Major holding: Exxon Mobil Corporation, boasting a 40-year dividend growth record.
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ProShares S&P 500 Dividend Aristocrats ETF (NOBL):
- Tracks S&P 500 Dividend Aristocrats Index, comprising companies with 25+ years of dividend increases.
- Featured holding: PepsiCo, Inc., with a 51-year consecutive dividend growth streak.
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iShares UK Dividend UCITS ETF (IUKD):
- Seeks performance from high-yielding UK dividend stocks.
- Leading holding: British American Tobacco, maintaining a 23-year streak of consistent dividend growth.
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Vanguard Dividend Appreciation Index Fund (VIG):
- Tracks S&P US Dividend Growers, focusing on companies with a history of increasing dividends.
- Prominent holding: Johnson & Johnson, known for its 62-year consecutive dividend growth.
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Global X MSCI SuperDividend EAFE ETF (EFAS):
- Tracks high-yielding securities from the MSCI EAFE Index.
- Key holding: BHP Group Limited, demonstrating strong cash generation.
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Consumer Staples Select Sector SPDR Fund (XLP):
- Focuses on the consumer staples sector of the S&P 500 for potential growth, income, and defense.
- Leading holding: The Procter & Gamble Company, boasting a 67-year consecutive dividend growth streak.
These top-performing dividend ETFs in 2023 exhibit resilience and steady returns, aligning with the preferences of investors seeking reliable income sources in dynamic market conditions. The specific holdings mentioned highlight the diversity within these funds and the emphasis on companies with a history of consistent dividend growth.
