SDY Just Hit A New Record High -- Up 8.2% Since Oct. 12. Should You Buy This Dividend ETF?
Key PointsHigh-yield dividend stocks tend to perform better during stock market crashes and recessions, when investors make a “flight to safety.”
On November 4, the SPDR S&P Dividend ETF (SDY) reached a new record high, marking an 8.8% gain over the past month. This growth ETF appeals to investors seeking steady income and a safer investment option amid market volatility. As the AI boom intensifies, the Nasdaq-100 has declined by 11.2% since its record high on October 6, prompting some investors to consider SDY for its defensive qualities.
SDY focuses on high-yield dividend stocks from financially strong, well-established companies with a history of paying dividends for at least 20 consecutive years. Despite not being entirely risk-free, these stocks tend to perform better during market downturns due to investor preference for safer assets. Notable holdings in SDY include Verizon, PepsiCo, and McDonald's, showcasing a diverse range of high-quality companies.
While SDY has delivered lower annualized returns compared to the S&P 500 over certain periods, it offers competitive dividends and a long track record of performance. For investors concerned about tech stock volatility and potential AI-related downturns, SDY may provide a balanced investment option.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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