"Even as Stocks Tumble, I Trusted You"... The Secret of the ETF with Steady Upward Momentum [Weekend Money] [Weekend Money]

U.S. Dividend Stocks Offer Strong Defense in Volatile Markets
Healthcare and Energy Exposure Drive Upward Momentum

As the clashes between the United States and Iran that began early this year continue, the stock market, including macro sectors, has been fluctuating daily. Amid this volatility, there is an ETF that has been trending upward: the Schwab US Dividend Equity ETF (Dow Jones High Dividend, SCHD). According to the securities industry, this product is not only designed to defend against volatility, but can also offer potential for upward momentum.

As the clashes between the United States and Iran that began early this year continue, the stock market, including macro sectors, has been fluctuating daily. In this situation, there is an ETF that has been trending upward. Getty Images

Wooyeol Park, a researcher at Shinhan Investment Corp., stated, “The index product that has continued to trend upward in the recent market correction is SCHD, which has benefited from sector bias in high-dividend US stocks.” He added, “To manage volatility and respond to a global environment where geopolitical risks are rising, I recommend SCHD as well as the State Street Energy Select Sector SPDR ETF (XLE).”

Park explained, “The ETF has a high allocation to healthcare stocks, which have recently hit new record highs, and to the energy sector, which benefits from volatile oil prices amid geopolitical risk. It also maintains a significant exposure to consumer staples, which are less affected by market corrections. The constituents are selected by considering cash flow, ROE, and dividend sustainability, resulting in high defensive strength during volatile markets.”

He also highlighted that, unlike Korean dividend stock ETFs, US dividend stock ETFs are not overly concentrated in companies at the late stage of their lifecycle. Typically, companies in the early stage of their lifecycle focus on growth through reinvestment rather than dividends, so they are rarely classified as dividend stocks. In contrast, industries where companies are in the late stage of their lifecycle, and their growth potential is limited, tend to have a structure that favors high shareholder returns and strong dividend capacity. As a result, there tends to be a sector bias in high-dividend groups.

Park commented, “Due to differences in listing market structures by country, the sector composition of Korean and US dividend stock ETFs varies significantly.” In Korea, most allocation goes to banks and telecommunications companies, which are typically in the late stages of the corporate lifecycle. By contrast, US dividend stock ETFs have higher exposure to healthcare and energy sectors. Park added, “Both of these sectors have recently exhibited strong momentum; therefore, from a current perspective, US dividend ETFs can be seen not only as defensive but also as a way to invest in sectors with strong upward momentum.”

This content was produced with the assistance of AI translation services.