One of the dominant themes of 2022 is the volatility in the stock market. Unfortunately, it seems like it will persist throughout the whole year as the Federal Reserve has started implementing a tighter monetary policy to lower inflation from its historic highs. Dividend exchange-traded funds (ETFs) seem to be relatively safe investments as they offer steady returns, consistent passive income, and a high degree of diversification to mitigate market volatility.
These dividend-paying ETFs lower total risk, as stock-picking seems a tough game to win with all the intense price swings in this bear market. Some investors may not like these ETFs as they are a form of passive investing. You just pick them, invest in them, and wait to collect the dividends. Even for active investors, the idea of getting passive income should not seem like a bad idea. In a bear market, these ETFs may not deliver great returns, however, they can offer generous dividend yields and participate in capital appreciation as the stock market will make rallies even in a downtrend.
Here are three dividend-paying ETFs to buy now:
|IDIV||Metaurus U.S. Equity Cumulative Dividends Fund-Series 2027||$7.89|
|SDIV||Global X SuperDividend ETF||$9.35|
|REM||iShares Mortgage Real Estate Capped ETF||$25.95|
Dividend-Paying ETFs: Metaurus U.S. Equity Cumulative Dividends Fund-Series 2027 (IDIV)
Metaurus U.S. Equity Cumulative Dividends Fund-Series 2027 (NYSEARCA:IDIV) is a very interesting ETF that “seeks to provide monthly payments that, before fees and expenses, replicate the actual dividends paid by the S&P 500, without price exposure.”
Investors are allowed to have “access the potential dividend income of the S&P 500 Index without stock price exposure. IDIV has an initial 10-year life and expects to make monthly distributions.”
With this ETF, you get monthly distributions with a passive investment and no sector concentration. Year-to-date, the net asset value (NAV) is down 7.06%. The fund has a total expense ratio of 0.87% and offers a yield of 15.85%.
It is a rather small fund with net assets of $30.92 million, but this extra risk is well compensated by the generous dividend yield.
Global X SuperDividend ETF (SDIV)
First, there is a high passive income potential as the fund invests in 100 of the highest dividend-paying equities around the world. This is not only good news for generating income, but also a great diversification investment strategy. Second, the distributions are monthly and the ETF has a track record of more than 10 years of monthly distributions. Third, global exposure means that the exposure to high-interest rates is mitigated, as the focus is not just on the U.S. stock market.
The number of holdings is 111, the 12-month trailing yield is 12.8% and the 30-day Securities and Exchange Commission (SEC) Yield is 11.16%.
Year-to-date, the NAV is down 5.05% but since inception, it is up 4.87%. The total expense ratio is 0.58% and net assets are $724.12 million. Some of the top holdings include Logan Group Company Limited, Midea Real Estate Holding, CPFL Energia S.A., and Chongqing Rural Commercial Bank.
Dividend-Paying ETFs: iShares Mortgage Real Estate Capped ETF (REM)
iShares Mortgage Real Estate Capped ETF (BATS:REM) offers investors “exposure to the U.S. residential and commercial mortgage real estate sectors.”
The investment objective is to track the index composed of U.S. real estate investment trusts (REITs) that hold U.S. residential and commercial mortgages. REITs are a great way to get high dividend yields due to their obligation to pay at least 90% of taxable income as shareholder dividends each year.
The distribution frequency is quarterly, the net assets of fund as of Jun. 14, 2022 were $701,235,806 and the number of holdings is 33. Top holdings include Annaly Capital Management (NYSE:NLY), Starwood Property Trust (NYSE:STWD), and AGNC Investment (NASDAQ:AGNC).
The fund has a 97.73% exposure to mortgage REITS, 2.16% exposure to diversified REITs, and 0.12% exposure to cash and/or derivatives. The expense ratio is 0.48% and total return in 2022 has been negative 4.95%. The dividend yield is 7.28%.
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.