The Safest Dividend ETFs to Hold When Interest Rates Start Falling

"When rates begin to fall, securities like bonds tend to look less effective and attractive due to their low yields. And as investors get closer to retirement, fixed-income securities like bonds may make up a bulk of their portfolios. But retirees may benefit from high-yield dividend exchange-traded funds (ETFs) that can deliver a strong stream of income as well as capital growth."

"The Schwab U.S. Dividend Equity ETF (SCHD) screens for companies with strong fundamentals as well as a track record of consistent dividend payments. These companies may fare well when rates are dropping. In fact, SCHD's main holdings are in the energy, consumer staples and healthcare sectors. The latter two are defensive sectors. Moreover, SCHD offers a high yield of about 4% and has generated a five-year return of over 36%."

When interest rates fall, bonds yield less and become less attractive, while retirees hold fixed-income allocations. High-yield dividend ETFs can provide stronger income streams and capital growth by investing in high-quality companies with consistent dividend histories. Many dividend ETFs emphasize defensive sectors such as consumer staples and healthcare to remain stable across market cycles. The Schwab U.S. Dividend Equity ETF (SCHD) focuses on energy, consumer staples, and healthcare, yields about 4%, returned over 36% in five years, carries a 0.06% expense ratio, and holds $71.64 billion in net assets. The Vanguard High Dividend Yield ETF (VYM) targets above-average yields and holds nearly 600 stocks across 10 sectors, including financials, technology, and industrials.

Read at 24/7 Wall St.