No matter the market environment, investors should have a good dividend ETF in their portfolio for a number of reasons.
Among the biggest reasons is that dividend ETFs generally outperform in down markets, making them a near-perfect diversifier
They tend to outperform because they are composed of stable, established companies with lots of capital and cash flow that are able to consistently fund their dividends. These are value-oriented or blue chip companies and market leaders that typically perform well in various market cycles. And the dividend can boost the total return when it’s reinvested in the ETF.
But now, with markets volatile and overvalued, it is an even more critical time to have the balance and stability of a good dividend ETF. And there really arenʻt many better than the Schwab U.S. Dividend ETF (NYSEMKT: SCHD).