Since the beginning of the year, the market has suffered significant volatility due to multi-decade high inflation, the Fed’s planned interest rate increases, and continuing supply chain disruptions. Russia’s invasion of Ukraine added fuel to the fire. The S&P 500 is down more than 8% year-to-date. Despite bouncing back from its lows, rising oil prices are expected to keep the benchmark indexes under pressure in the near term.
High-yield dividend stocks are known to provide a buffer against market volatility. Dividend-paying stocks are considered an efficient way to hedge one’s portfolio against market uncertainty. In addition to delivering high dividend yields, they typically hold capital appreciation potential. Investors’ interest in dividend stocks is evidenced by the Global X S&P 500 Quality Dividend ETF’s (QDIV) 7% returns over the past six months compared to the SPDR S&P 500 Trust ETF’s (SPY) 2.5% decline.
