In previous years, investors have been focused on growth stocks and high-powered tech companies. But in 2026, there appears to have been a clear change in strategy for investors. Rather than continuing to chase high-valued stocks, investors have been focusing more on dividend stocks.
Since the start of the year, the S&P 500 has risen by less than 2%, and the Roundhill Magnificent Seven ETF, which includes the top tech stocks in the "Magnificent Seven," is down more than 3%. What's surprising is that it's been dividend stocks that have been the better buys of late.
The iShares Select Dividend ETF (DVY 0.01%) and the Schwab U.S. Dividend Equity ETF (SCHD 0.16%) are both beating the market, and it's not even close. Here's how well they've been doing thus far and why they can be great options for income investors today.
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iShares Select Dividend ETF: up 10%
This iShares exchange-traded fund (ETF) focuses on U.S. companies that have been paying dividends for at least five years, with the focus being to give investors access to reliable income investments.
There are around 100 stocks in the ETF, and one of the big reasons it's been doing well is that its top holding is Seagate Technology, which accounts for just under 4% of the fund's portfolio. The data storage stock has benefited from rising demand for its products as a result of an increase in tech spending. Year to date, Seagate's stock is up more than 50%, which has given the iShares Select Dividend ETF a boost along the way.
There are other quality dividend stocks in the ETF; they simply may not be as flashy or exciting as Seagate right now. Pfizer and Verizon Communications are top stocks in the fund as well, and can be quality investments to hold for the long term.
NASDAQ: DVY
Key Data Points
Overall, this can be a solid income-generating ETF to hang on to, with the iShares fund yielding around 3.4%, which is more than three times the S&P 500 average of 1.1%. The ETF's expense ratio of 0.38% also isn't terribly high.
Schwab U.S. Dividend Equity ETF: up 13%
The Schwab U.S. Dividend Equity ETF has been an even hotter investment to own this year, and it too has benefited from a couple of high-flying stocks being among its largest holdings. Lockheed Martin and Texas Instruments each make up more than 4% of the ETF's holdings, and both of these stocks are up more than 25% for the year, as of Monday's close.
NYSEMKT: SCHD
Key Data Points
At 3.5%, the Schwab fund offers investors an excellent yield, and its expense ratio is just 0.06%, making it an ideal low-cost option. Like the iShares fund, it also has around 100 holdings in its portfolio, providing investors with some great diversification.
The fund's focus on quality dividend stocks with sustainable payouts makes this a suitable investment to hang on to for the long haul.
