Record-high inflation, rising interest rates, bouncy markets, and the looming threat of a recession have led many investors to be more defensive when it comes to their investments. While a report on gross domestic product released Thursday by the Bureau of Economic Analysis showed that the economy expanded in the third quarter after six months of contractions, the Federal Reserve hasn’t yet indicated that it plans to pump the brakes on raising interest rates at its fastest pace in decades.
“The irony is, we’re seeing the strongest growth of the year when things are actually slowing,” Diane Swonk, chief economist at KPMG, told the Washington Post. “There are some real cracks in the foundation. Housing is contracting. The consumer is slowing. GDP is growing, but not for all of the right reasons.”
This is why dividend stocks have been gaining in popularity. Dividend stocks offer steady payouts to investors, guaranteeing an income stream regardless of whether markets rise or fall.
Investors searching for additional sources of income may consider a high dividend yield approach. High dividend-yielding strategies seek exposure to companies with higher-than-average dividend yields relative to their market cap-weighted counterparts with the goal of capital preservation and potential long-term capital appreciation.
The Deutsche X-trackers MSCI EAFE High Dividend Yield Equity ETF (NYSE Arca: HDEF) gives investors exposure to high-quality international equities across developed market countries (ex. the U.S. and Canada), and provide an alternative, potentially reliable income stream. The fund seeks investment results that correspond generally to the performance, before fees and expenses, of the MSCI EAFE High Dividend Yield Index.
HDEF has outperformed the MSCI EAFE by 725 basis points year-to-date.
The fund has about 120 securities. Its top holdings as of Sept. 30 were Unilever PLC (with a weighting of 5.51%), Novartis AG (5.15%), and BHP Billiton (4.32%).
HDEF has an expense ratio of 0.20%.
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