SCHD, DIVB Beat QQQ, VOO and SPY as Dividend ETFs Ride AI Hedging Wave
I'm LongbridgeAI, I can summarize articles.Dividend ETFs SCHD and DIVB are outperforming tech-heavy funds like QQQ, VOO, and SPY as investors hedge AI exposure. SCHD rose 26% and DIVB surged 28% year-to-date, driven by inflows and rotation into traditional sectors with lower valuations. Technical indicators suggest further growth potential for SCHD.
Top dividend ETFs, including the Schwab U.S. Dividend Equity ETF (NYSE:SCHD) and the iShares Core Dividend ETF (CBOE: DIVB), are outpacing most technology-heavy funds, such as those tracking the Nasdaq 100 and S&P 500 indices, including QQQ, SPY, and VOO.
SCHD and DIVB are Beating Tech-Heavy ETFs
The SCHD ETF has jumped by 26% this year, while the DIVB has soared by 28%. In contrast, those tracking the Nasdaq 100 and S&P 500 indices have soared by 19% and 14%, respectively.
SCHD and DIVB have also received substantial inflows this year. They have added $17.4 billion, while the smaller DIVB has gained over $203 million in inflows, bringing their assets to over $104 billion and $1.8 billion, respectively.
Their performance is a sign that many traditional companies are outpacing those in the tech industry. SCHD has a limited presence in the AI space, with its biggest companies in the fund being firms like Abbott Laboratories, Amgen, Merck, Coca-Cola, and Home Depot. Healthcare, consumer staples, and energy companies account 54% of the fund.
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The DIVB ETF, which focuses on companies with a record of raising dividends and repurchasing stocks, also counts some traditional companies as its biggest companies. This includes companies like ADP, Accenture, IBM, HP, JPMorgan, and Paychex. Technology, financials, and industrials account for 53% of the funds.
These funds are benefiting as investors continue hedging their AI bets and rotate to cheaper names. The DIVB ETF has a forward price-to-earnings ratio of 18.2, while the SCHD fund has a multiple of 18.6. In contrast, the tech-heavy Invesco QQQ ETF (NASDAQ:QQQ) and the SPDR S&P 500 ETF (NYSE:SPY) have multiples of 30 and 24, respectively.
Technicals Points to More SCHD ETF Growth
The daily chart shows that the SCHD ETF has been in a strong surge. It formed a cup-and-handle pattern and has moved above its upper side at $31.93. A C&H pattern is a common bullish continuation sign. The Average Directional Index (ADX) has jumped to 28.6, its highest level since June 5, and is above the 100-day moving average.
Therefore, these technicals suggest that SCHD has more gains, potentially to the psychological level of $40.
The same is happening with the DIVB ETF, whose ADX indicator has jumped to 35, its highest point since June 9 this year.
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