Fed Stays Put, No Rush to Cut Rates: Dividend ETFs to Tap

The Federal Reserve opted to keep interest rates unchanged on Wednesday, marking the third consecutive meeting with no change to policy. This decision comes despite increasing public pressure from President Trump to lower rates amid growing economic uncertainties.

Note that the Federal Open Market Committee voted unanimously to keep the benchmark rate in the 4.25% to 4.5% range, where it has remained since late 2024 after a 100-basis-point cut.

Powell Cautions on Elevated Uncertainty

In his post-meeting press conference, Fed Chair Jerome Powell emphasized caution, stating that the central bank is in no rush to alter policy. Policymakers acknowledged a rise in economic uncertainty but highlighted that the economy continues to grow at a “solid pace,” even as volatile trade figures influenced recent GDP data. We believe any future Fed move depends on the effects of Trump’s tariffs.

Tariffs Cloud Economic Outlook

A recent GDP report showed the U.S. economy contracted in Q1 of 2025 for the first time in three years, mainly due to businesses’ front-loading imports ahead of Trump’s tariffs. While officials noted stronger job market fundamentals, they also acknowledged rising risks of both inflation and unemployment.

Labor Market Remains Resilient

Despite concerns, the Fed described the labor market as “solid,” with unemployment stabilizing at low levels. An April jobs report supported that view, showing continued labor market strength even after Trump’s high-profile "Liberation Day" tariff announcements (read: Upbeat April Jobs Data Put Focus on 3 Sector ETFs & Stocks).

Dividend ETFs to Tap

Against this edgy backdrop, below we highlight a few dividend-based exchange-traded funds (ETFs) that could be gainful in the coming days.Investors should note that not all dividend stocks serve the same purpose.

While the high-yield ones are known for offering hefty current income, stocks with dividend growth point to quality investing — a prerequisite to making money in this volatile environment.

SPDR S&P Dividend ETF SDY

The underlying S&P High Yield Dividend Aristocrats Index measures the performance of the highest-dividend-yielding S&P Composite 1500 Index constituents that have followed a managed-dividend policy of consistently increasing dividends every year for at least 20 consecutive years. The fund charges 35 bps in fees and yields 2.67% annually (read: 5 Good ETFs to Invest in and Forget).

Siren DIVCON Dividend Defender ETF DFND

The underlying Siren DIVCON Dividend Defender Index capitalizes on the theory that, over time, companies that consistently grow their dividends tend to have investment returns above overall market returns, and companies that do not grow their dividends tend to have investment returns below overall market returns. The expense ratio of the fund is 1.63%. The fund yields 1.19% annually.

ProShares S&P 500 Dividend Aristocrats ETF NOBL

The underlying S&P 500 Dividend Aristocrats Index targets companies that are currently members of the S&P 500, have increased dividend payments each year for at least 25 years & meet certain market capitalization & liquidity requirements. The fund charges 35 bps in fees and yields 2.18% annually.

Vanguard High Dividend Yield ETF VYM

The underlying FTSE High Dividend Yield Index consists of common stocks of companies that pay dividends, generally higher than average. The fund charges 6 bps in fees and yields 2.96% annually.

Global X SuperDividend U.S. ETF DIV

The underlying INDXX SuperDividend U.S. Low Volatility Index tracks the performance of 50 equally weighted common stocks, MLPs & REITs that rank among the highest dividend-yielding equity securities in the United States. The fund yields 6.11% annually and charges 45 bps in fees.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research