Dividend Stock ETFs: Achieving Alpha With Defense

Investors got a wake up call this week after the President's day: for the past two days, S&P has dropped 2.6%. We reviewed dividend stock ETFs performance in the following three equity classes: U.S. Equity: U.S. dividend stock ETFs appeared resilient among the broader market correction. For the past one week, for example, Vanguard High Dividend Yield ETF (VYM) had the lowest loss: -0.68%, compared with SPY's 2.11% loss. In general, all broad U.S. dividend stock ETFs (SDY, FVD, DVY, VIG) outperformed the S&P 500 benchmark (SPY), showing that in general, dividend ETFs are more defensive during market stress. International Equity: similarly, Powershwares International Dividend Achievers (PID) lost only 0.69%, compared with EFA's 2.07% loss in the last 5 days. Emerging Market Equity: WisdomTree's Emerging Market Income (DEM) lost 1.57%, compared with EEM's 2.18% loss. Preferred stocks showed the least loss (-0.48%) among all the dividend ETFs we monitored. For... Read more