7 Dividend ETFs Built to Survive a Recession — and Pay You Through It

Core Insights - Recessions are normal in the business cycle but can be financially devastating, leading to economic decline, increased unemployment, reduced wages, business failures, and market contractions [2] - Dividend ETFs are utilized by investors to protect their portfolios from the adverse effects of economic downturns [2] Dividend ETF Characteristics - Not all dividend ETFs are equal; those that perform well during recessions typically invest in high-quality companies with strong financials, consistent dividend payouts, and low volatility [3] - These resilient ETFs are often concentrated in defensive sectors that tend to remain stable across various market cycles [3] Recommended Dividend ETFs - Vanguard High Dividend Yield ETF (VYM): Invests in over 500 large value companies, yielding around 2.44% with a five-year return of over 64% and a low expense ratio of 0.06% [5][6] - Schwab U.S. Dividend Equity ETF (SCHD): Focuses on high-quality companies with sustainable dividends, yielding about 4% and achieving a five-year return of over 35%, also with a low expense ratio of 0.06% [7] - Vanguard Dividend Appreciation ETF (VIG): Targets companies with a history of increasing dividends, diversified across more than 300 large-cap companies, with 27% of its portfolio in the information technology sector benefiting from the AI boom [8]