The Dividend ETF Quietly Outperforming the S&P 500

1 month ago 25

Matt DiLallo, The Motley Fool

Tue, July 7, 2026 astatine 4:50 AM CDT 4 min read

The iShares Core High Dividend ETF (NYSEMKT: HDV) isn't arsenic ample oregon arsenic fashionable arsenic different dividend ETFs. As a result, galore investors person apt missed that the money is outperforming the S&P 500 this year. While that wide marketplace scale was up a beardown 9% done the archetypal fractional of the year, HDV is up much than 15%.

Here's a person look astatine this apical ETF and what has driven its quiescent outperformance truthful acold this year.

Missed Nvidia successful 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" awesome flashed for a little-known chipmaker called Nvidia. For the archetypal clip successful years, that aforesaid "Total Conviction" awesome is flashing for a institution 1/100th the size of Nvidia. Continue »

A idiosyncratic adjacent respective upward pointing arrows.

High-quality, high-yielding dividend stocks

The iShares Core High Dividend ETF is simply a passively managed money that tracks an scale of high-yielding U.S. dividend stocks (Morningstar Dividend Yield Focus Index). That scale doesn't conscionable surface companies based connected their dividend yield. It besides applies further fiscal prime screens, including having a wide economical moat (sustainable competitory advantage) and a precocious region to default (strong fiscal health). The scale selects the highest-yielding stocks from those that walk its prime screens. It weights stocks successful proportionality to the dividends they pay.

The nett effect is an ETF that presently holds 75 stocks. The iShares Core High Dividend ETF has a 2.9% dividend output based connected its existent terms and dividend payments implicit the past 12 months. That's astir 3 times higher than the S&P 500's existent dividend output of 1.1%.

The ETF's apical 5 holdings are:

ExxonMobil: 7.1% weighing successful the ETF.
AbbVie (NYSE: ABBV): 6.6%
Chevron: 5.4%
Verizon: 5.1%
Home Depot: 4.9%

While 2 of its apical 3 holdings are vigor stocks, the fund's wide allocation to the vigor assemblage is 12.2% (third-largest sector). Consumer staples 24.5% and healthcare (23.9%) are its largest sectors.

What's driving the beardown show successful 2026?

The fund's comparatively precocious vulnerability to the vigor assemblage has helped thrust its outperformance this year. The Iran warfare initially drove up lipid prices, fueling a rally successful lipid stocks. For example, shares of ExxonMobil and Chevron are up 14% and 11%, respectively, this year, outperforming the S&P 500.

However, lipid isn't the lone origin driving HDV's quiescent outperformance this year. The money has besides benefited from its precocious vulnerability to healthcare stocks, notably AbbVie and Merck (NYSE: MRK), the second of which is its 9th-largest holding astatine 4.1%. Shares of AbbVie person gained much than 14% portion Merck has rallied implicit 23%. AbbVie reported a 12.4% summation successful first-quarter revenue, driven by the spot of its immunology (up 16.4%) and neuroscience portfolios (up 26%). AbbVie besides took a measurement to deepen its immunology portfolio by precocious agreeing to get Apogee Therapeutics for $10.9 billion. Meanwhile, Merck reported 5% income maturation successful the archetypal quarter, driven by a 12% summation successful Keytruda sales. The institution besides strengthened its oncology pipeline by acquiring Terns Pharmaceutical for $6.7 billion.

Read Entire Article