Top ETFs to Consider in the Current Market Environment

In uncertain economic times, investing in high-dividend exchange-traded funds (ETFs) can be a sound strategy. Certain ETFs focused on energy and real estate sectors are struggling due to the impacts of COVID-19.

Below are five notable high-dividend ETFs that may serve as solid investment choices during this period:

Legg Mason Low Volatility High Dividend ETF (LVHD)

This ETF offers attractive high yields with reduced volatility. While returns may be negative for the year, its performance surpasses that of the S&P 500. It tracks the QS Low Volatility High Dividend Index, with nearly 25% invested in energy and real estate sectors.

Investments are diversified, with no single holding exceeding 2.8%, minimizing risk. LVHD offers a 3.36% yield and charges an expense ratio of 0.27%.

VictoryShares US Large Cap High Dividend Volatility Weighted ETF (CDL)

Established over five years, with assets exceeding $207 million, CDL tracks the Nasdaq US Large Cap High Dividend 100 Volatility Index. It employs flexible strategies, favoring yield while avoiding real estate exposure but maintaining significant holdings in financial services at 22.84%.

The fund’s yield is approximately 3.23%, with an expense ratio of 0.35%.

Xtrackers MSCI EAFE High Dividend Yield ETF (HDEF)

Despite global volatility, HDEF presents a 4.77% dividend yield, making it appealing. Its energy sector exposure is minimal at 4.65%, focusing on integrated oil companies that prioritize cost reduction over dividend cuts. Geographically, it allocates 24.64% to the UK and 11% to Japan, providing stability during tumultuous times. The expense ratio is 0.20%.

Vanguard Small-Cap ETF (VB)

Tracking the CRSP US Small Cap Index, VB offers an affordable way to diversify into small-cap stocks with a median market cap of $4.2 billion. Investing here presents growth potential based on relative value opportunities. Its expense ratio is 0.05%, with a dividend yield of approximately 2%.

WisdomTree Emerging Markets ex-State Owned Enterprises ETF (XSOE)

As China reopens and fuel consumption recovers, XSOE is a promising choice to capitalize on emerging market rebounds. It tracks the WisdomTree Emerging Markets ex-State Owned Enterprises Index, investing in non-state-owned companies across emerging markets. With 39% exposure to China, and divisions into Taiwan and South Korea, the fund offers a dividend yield of about 2.6% and an expense ratio of 0.32%.