5 Solid Dividend ETF & Stock Picks That Yield 5% or More

Investors have once again turned defensive and are chasing dividend stocks & ETFs ahead of the tariff hike on Dec 15. The President previously stated that he will impose tariffs on $160 billion worth of Chinese goods from Dec 15, as announced, if a deal is not reached.  Trump said that he will wait until the November 2020 election to strike a deal.

Additionally, Trump is planning to restore tariffs on steel and aluminum imports from Brazil and Argentina and proposed tariffs of up to 100% on $2.4 billion worth of products from France.

Further, the bouts of latest data signals mixed picture of the economy. The U.S. manufacturing sector contracted for the fourth straight month in November with a steep drop in new factory orders. U.S. construction spending also unexpectedly fell in October as investment in private projects tumbled to its lowest level in three years. However, the job market strengthened in November with the fastest pace of job additions and unemployment falling to the lowest level since 1969 (read: 5 Sector ETFs to Win After Robust November Jobs Data).

The combination of these factors has made investors jittery.

Why Dividends?

Dividend paying securities are the major sources of consistent income for investors, creating wealth when returns from the equity market are at risk. This is because the companies that pay dividends generally act as a hedge against economic uncertainty and provide downside protection by offering outsized payouts or sizable yields on a regular basis.

With lower interest rates and the stock market trading at near all-time highs, the high dividend paying stocks & ETFs could be excellent picks at present. In fact, these could be viewed as a safe haven in case of a market pullback as the S&P 500 is up nearly 24% so far this year.

Given this, we have highlighted five ETFs and stocks that yield more than 5% in dividends and could be interesting plays this month.

ETF Picks

We have highlighted ETFs that offer broad exposure to a number of sectors with a dividend yield of more than 5% and AUM of above $50 million.

Legg Mason International Low Volatility High Dividend ETF LVHI – Annual Yield: 10.70%

This ETF offers exposure to the equity securities of developed markets outside the United States with relatively high yield and low price and earnings volatility. It follows the QS International Low Volatility High Dividend Hedged Index, holding 112 stocks in the basket with key holdings in communication services, financials, utilities, and consumer discretionary. The product has accumulated $55.6 million in its asset base and charges 40 bps in annual fees. It trades in a paltry volume of 8,000 shares a day on average.

Global X SuperDividend ETF SDIV – Annual Yield: 9.09%

This ETF provides exposure to 104 highest dividend paying equities around the world by tracking the Solactive Global SuperDividend Index. About 43.4% of the portfolio is allocated to United States while Australia rounds off the next spot with 15.5% share. The product has amassed $929.1 billion in its asset base and sees good trading volume of about 350,000 shares a day on average. Its expense ratio is 0.58%. The fund has a Zacks ETF Rank #3 (Hold) with a Low risk outlook (read: Why These ETFs Under $20 Seem Solid Picks for 2020).

Global X SuperDividend U.S. ETF DIV – Annual Yield: 7.67%

This fund provides exposure to 50 of the highest dividend yielding U.S. securities by tracking the INDXX SuperDividend U.S. Low Volatility Index. Mortgage REITs, MLPs, consumer staples, and communication services are the top four sectors accounting for double-digit exposure each. The product has amassed $563.3 million in its asset base while trading in good volume of about 143,000 shares. It charges 45 bps in fees per year from investors and has a Zacks ETF Rank #3 with a Medium risk outlook.

FlexShares Quality Dividend Defensive Index Fund QDEF – Annual Yield: 5.89%

This product fund follows the Northern Trust Quality Dividend Defensive Index, which offers exposure to a high-quality income-oriented portfolio of U.S. stocks with an emphasis on long-term capital growth and a beta higher than the Northern Trust 1250 Index. In total, the fund holds 162 stocks in its basket with key holdings in information technology, health care, financials, consumer staples and consumer discretionary. QDEF has $478.2 million and trades in a paltry volume of about 29,000 shares. It charges 37 bps in expense ratio (read: Why You Should Bet On Quality ETFs Now).

First Trust Dow Jones Global Select Dividend Index FGD – Annual Yield: 5.78%

This ETF tracks the Dow Jones Global Select Dividend Index, which is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. It holds 99 stocks in its basket with key holdings in financials, consumer cyclicals and telecommunication services. It has amassed $593.4 million in its asset base and charges 58 bps in annual fees from investors. Volume is moderate trading in average daily volumes of 102,000 shares. The fund has a Zacks ETF Rank #3 with a Low risk outlook.

Stock Picks

We have chosen five top picks using the Zacks Stock Screener that fits our criteria — a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Value Score of A or B. Our chosen stocks are:

Antero Midstream Corporation AM – Annual Yield: 27.39%

This Colorado-based company is a leading provider of integrated and customized midstream services. Antero Midstream has a Zacks Rank #2 and a market capitalization of $2.3 billion.

Tailored Brands Inc. TLRD – Annual Yield: 14.01%

This Texas-based company is a specialty retailer of men's suits and provider of tuxedo rental product primarily in the United States and Canada. It has a Zacks Rank #2 and a market capitalization of $260.3 million (read: 5 Dividend ETFs to Tap if the Initial Trade Deal Fails).

Vector Group Ltd. VGR – Annual Yield: 11.94%

This Florida-based company is principally engaged in the manufacture and sale of cigarettes and the sale of information processing systems. Vector Group has a Zacks Rank #2 and a market capitalization of $2 billion.

CNX Midstream Partners LP CNXM – Annual Yield: 11.39%

With a market cap of $895.5 million, this Pennsylvania-based master limited partnership owns, operates and develops natural gas gathering and other midstream energy assets, primarily in the Marcellus Shale in Pennsylvania and West Virginia. It has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek Logistics Partners L.P. DKL – Annual Yield: 11.17%

This Tennessee-based company owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the United States. It has a market capitalization of $785.1 million and has a Zacks Rank #2.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.