Major indexes have been on a roller coaster since the start of 2022 as investors are concerned about higher inflation, rising rates and the fast-spreading Omicron variant.
China’s zero-tolerance policy for Covid has led to frequent lockdowns at its ports and factories, which means supply chain disruptions could continue in the coming months and keep inflation high.
The Fed could raise rates more quickly than earlier expected to tame inflation. The Fed fund futures currently indicate more than 80% probability of a rate hike in March.
Corporate earnings and economic growth are expected to slow down in 2022, but remain significantly above trend levels. In this environment, it makes sense to invest in high quality companies with solid balance sheets and stable cash flows. Dividend Growth ETFs provide diversified access to such stocks.
The Vanguard Dividend Appreciation ETF (VIG – Free Report) is the most popular dividend ETF with over $68 billion in assets. The fund charges just 6 basis points in annual fees. Microsoft (MSFT – Free Report) and JP Morgan (JPM – Free Report) are its top holdings.
The Schwab U.S. Dividend Equity ETF (SCHD – Free Report) focuses on the quality and sustainability of dividends. The product has an expense ratio of just 6 basis points. Pfizer (PFE – Free Report) and Broadcom (AVGO – Free Report) are its top holdings.
The iShares Core Dividend Growth ETF (DGRO – Free Report) selects its holdings by dividends, dividend growth and payout ratio. The fund charges just 8 basis points in annual fees. Apple (AAPL – Free Report) and J&J (JNJ – Free Report) are among the …….