Past S&P 500 Performance Bodes Well for This Dividend ETF

High-yielding stocks have history on their side. As the S&P 500 continues to climb to new highs, investors needn't worry about a sudden drop in performance. That bodes well for high-yielding dividend funds.

"According to a report by Barron’s, high-yielding dividend stocks have consistently surpassed the S&P 500 performance over the last thirty years," Yahoo Finance said, noting that on average, these stocks have been outperforming the index by over 20% "from the lowest point to the highest point in cycles lasting nearly a year."

Additionally, the report noted that after hitting a peak, the high-yielding stocks' performance doesn't retreat. They historically sustained that above-average performance for another two years. Only twice in recent history were they worse than the broader index.

“There have been only two periods where high dividend-yielding stocks have performed worse relative to the S&P 500 on a year-over-year basis: the tech bubble and the pandemic," said BMO’s Chief Investment Strategist Brian Belski. "According to our work, this type of abnormal underperformance has typically proved to be an inflection point historically. These stocks tend to stage an impressive recovery following such levels.”

Right now, big tech is the obvious play when it comes to price appreciation. But for dividends, a more discerning screener is necessary. More specifically, that is one that offers diversification across various sectors as opposed to concentrating on big tech. That said, an option to ponder is the ALPS Sector Dividend Dogs ETF (SDOG).