Investors are bracing themselves for global market volatility as early 2025 approaches, prompting many to rethink their strategies, particularly with regards to dividend exchange-traded funds (ETFs).
With changes happening daily, the volatility observed is nudging investors away from cash holdings and money market funds, redirecting them toward dividend ETFs. These funds provide the potential for growth alongside income generation—a double win for any investor.
Dividend ETFs, by design, tend to gain more attention when interest rates decline. This backdrop showcases the recent surge of interest, as many financial analysts indicate it is the right time to explore options within this investment avenue. The Fidelity High Dividend ETF (FDVV) and the Fidelity International High Dividend ETF (FIDI) are prime examples of funds catching investor interest.
Fidelity's High Dividend ETF focuses on securities from the Fidelity High Dividend Index, which consists of large and mid-cap companies projected to continue paying dividends. This ETF, boasting a 30-day SEC yield of 2.71% as of December 16, shows promise. Residents of the United States have received favorable returns from FDVV as it clocked impressive gains of 37.82% based on total returns by the end of November.
The top holdings for FDVV include high-profile companies such as NVIDIA, Apple, Microsoft, Targa Resources, and Procter & Gamble. Notably, the technology sector dominates the fund, representing around 25.05% of its total assets, which amount to $4.3 billion.
Meanwhile, the Fidelity International High Dividend ETF (FIDI) tracks its own index comprising large and mid-cap international firms with promising dividend growth. Remarkably, FIDI offers investors exposure to overseas markets, with its SEC yield at 5.55% as of the same December date. The fund grew by 20.36% over the year leading up to November 30.
Those opting for international exposure through FIDI are leaning on investments from prominent companies such as Enel SpA, SoftBank Corp, Telefonica, Vodafone, and Engie. Financials make up the lion's share of this ETF at 31.36%, showcasing potential opportunities particularly valuable to international investors. Canada stands out as FIDI's leading country exposure, comprising 17.43% of its portfolio.
The substantial presence of these dividend ETFs provides investors with attractive options, and many are reassessing their current allocations as markets gear up for possible turbulence.
Both funds not only cater to differing market exposures—one domestic and the other international—but they also reflect current investment trends aiming for resilience against market throes.
Investors seeking to take advantage of the current market conditions may see these dividend ETFs as tools for both income generation and capital appreciation, offering suitable alternatives to those who might find themselves sidelined or uncertain amid market fluctuations.
For investors interested, tools like FDVV and FIDI can provide pivotal opportunities, leading them to diversify portfolios and explore the benefits of dividend-based strategies. This trend aligns with many analysts' expectations, forecasting increased demand for dividend-paying stocks as interest rates are anticipated to remain low. Keeping these factors central as global markets adjust may prove beneficial as we head toward early 2025.