While some tech earnings offered fresh cues to Wall Street for a sustained rally, the undercurrent of the global markets looks anything but steady. There were renewed attacks in the Persian Gulf, as traders await further signs of whether the United States and Iran can reach a peace deal that would reopen the Strait of Hormuz.
Apart from the Iran, concerns related to rich artificial intelligence (AI) valuations are also rife. Investors grew increasingly cautious amid mounting economic uncertainty and stretched market valuations.
Meanwhile, sticky inflation and rising rate fears are putting pressure on markets. The Federal Reserve’s preferred inflation measure accelerated to a three-year high in April, heightening concerns among policymakers and investors that price pressures are becoming more entrenched across the economy, as quoted on Yahoo Finance.
Fed Vice Chair Philip Jefferson said Wednesday evening that inflation should decline later this year as the effects of tariffs and energy-related shocks begin to fade. However, he acknowledged that risks to the inflation outlook remain skewed to the upside.
Fed Governor Lisa Cook said that she is “prepared to raise rates” if inflation fails to moderate in a “timely manner,” as quoted on Yahoo Finance.
Time for Dividend Investing?
In such a volatile scenario, dividend exchange-traded funds (ETFs) normally come to the rescue. The hunt for dividends in the equity market is always on, irrespective of how it is behaving. After all, who doesn’t like a steady stream of current income along with capital gains? And if investors are mired in a web of equity market uncertainty, global growth worries and geopolitical crisis, the lure for dividend investing increases further.
Investors should note that not all dividend stocks serve the same purpose. While the high-yield ones are known for offering hefty current income, stocks with dividend growth point to quality investing — a prerequisite to making money in this volatile environment.
Against this backdrop, it makes sense to hold some higher-yielding, dividend-based ETFs. If the Fed hikes rates further, strong current income could help investors weather the adverse impact to some extent.
ETFs in Focus
First Trust Dow Jones Global Select Dividend Index Fund FGD – Up 1.9% past month (as of May 27, 2026); yields 5.05% annually.
The underlying Dow Jones Global Select Dividend Index is an indicated annual dividend yield weighted index of 100 stocks selected from the developed-market portion of the Dow Jones World Index. The fund charges 55 bps in fees.
First Trust Morningstar Dividend Leaders Index Fund FDL – Up 1.0% past month; yields 3.64% annually.
The underlying Morningstar Dividend Leaders Index consists of stocks listed on one of the three major exchanges, NYSE, NYSE Amex or Nasdaq, that have shown dividend consistency and dividend sustainability. The fund charges 43 bps in fees.
iShares International Select Dividend ETF IDV – Up 2.0% past month; yields 4.39% annually.
The underlying Dow Jones EPAC Select Dividend Index measures the performance of a select group of equity securities issued by companies that have provided relatively high dividend yields on a consistent basis over time. The fund charges 50 bps in fees.
State Street SPDR Portfolio S&P 500 High Dividend ETF SPYD – Up 2.9% past month; yields 4.17% annually.
The underlying S&P 500 High Dividend Index is designed to measure the performance of the top 80 dividend-paying securities listed on the S&P 500 Index, based on dividend yield. The fund charges 7 bps in fees.
Amplify CWP Enhanced Dividend Income ETF DIVO – Up 1.4% past month; yields 6.37% annually.
The Amplify CWP Enhanced Dividend Income ETF seeks to deliver both dividend and option income to investors on a monthly basis. The fund charges 56 bps in fees.
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First Trust Morningstar Dividend Leaders ETF (FDL): ETF Research Reports
First Trust Dow Jones Global Select Dividend ETF (FGD): ETF Research Reports
State Street SPDR Portfolio S&P 500 High Dividend ETF (SPYD): ETF Research Reports
iShares International Select Dividend ETF (IDV): ETF Research Reports
Amplify CWP Enhanced Dividend Income ETF (DIVO): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).