"No matter how much investors hope it will happen, volatility in the stock market isn't going away, and market swings of a few percentage points in a single day, which used to be incredibly rare, may become more common, especially if we are truly in an AI bubble or if there are truly signs that the last three years of double-digit gains point to signs of an impending crash."
"The difference between a dividend fund that breaks when things get tough and one that endures all comes down to what is "under the hood." Some funds are going to chase yield by loading on shaky companies or overweighting in a single sector like technology. If this sector gets hit hard, the entire fund is affected, and dividend cuts could follow."
"Fortunately, these ETFs take a different approach by screening for companies with strong balance sheets, consistent earnings, and that have already demonstrated they can perform during downturns. There is also a sizable amount of diversity, so that no single company or sector is weighing things down. The thing you need to know most is that when the market drops by 20%, these funds might fall 10%, but the dividend checks keep arriving, no matter what, and that is completely by design."
Volatility in the stock market has become more frequent, with multi-percent daily swings and potential bubble or crash risks. Dividend investors face a choice between holding cash and building portfolios that remain resilient in messy markets. Many dividend strategies fail during downturns by chasing yield or concentrating in weak sectors. Three ETFs prioritize quality by selecting companies with strong balance sheets, consistent earnings, and regular dividend increases while maintaining sector and issuer diversity. Those ETFs aim to reduce drawdowns — for example, falling less when markets drop — while continuing to deliver dividend payments by design. Fidelity High Dividend ETF (NYSE:FDVV) is suggested as a starting option.
Read at 24/7 Wall St.
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