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These 2 Dividend ETFs Could Shine if Rate Cuts Hit Again in 2026
Reported by Jordan Chussler. Article Posted: 2/16/2026.
Key Points
- Interest rate cuts and Kevin Warsh’s potential "dovish" Fed leadership are driving income investors away from bonds toward high-yield equities.
- Popular ETFs like JEPI and SPYI offer massive yields but often lack the long-term share price growth found in other dividend-focused funds.
- The SCHD and the VIG provide reliable income and capital appreciation, with both outperforming the S&P 500 so far in 2026.
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With the Federal Reserve having started a rate-cutting cycle in each of the past two years—and markets pricing in additional cuts later in 2026, according to CME Group's FedWatch Tool—income investors are likely to keep turning to equities to generate meaningful yield.
The Fed's benchmark—the effective federal funds rate—is currently 3.64%, its lowest level since fall 2022. If President Trump's next Fed chair nominee, Kevin Warsh, proves to be dovish on interest rates, that could create further headwinds for fixed income.
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For investors aiming to get ahead of possible rate cuts, dividend growth exchange-traded funds (ETFs) can play a key role in producing reliable—and growing—income that helps offset persistent inflation and supplements a broader dividend portfolio of individual stocks.
Not All Dividend ETFs Are Created Equal
Income investors are likely familiar with funds such as the JPMorgan Equity Premium Income ETF (NYSEARCA: JEPI) and the NEOS S&P 500 High Income ETF (BATS: SPYI). Both have grown popular in dividend-focused portfolios for their high yields and monthly distributions.
JEPI currently yields 8.02%, or $4.73 per share annually, while SPYI currently yields 11.79%, or $6.15 per share annually.
However, those funds are less focused on dividend growth and long-term share appreciation. Since its inception in May 2020, JPMorgan's income fund has largely traded between $50 and $63.19. NEOS's income alternative has traded between $43.59 and $52.68 since its September 2022 debut.
For investors seeking dependable dividend growth alongside appreciation potential, the Schwab US Dividend Equity ETF (NYSEARCA: SCHD) and the Vanguard Dividend Appreciation ETF (NYSEARCA: VIG) are strong options.
Both funds emphasize companies with stable and growing cash flows, which tends to reduce volatility. Since their launches, SCHD and VIG have delivered cumulative gains of more than 269% and nearly 353%, respectively, dating to SCHD's debut in October 2011 and VIG's in April 2006.
Here's a breakdown of each ETF and why they appeal to yield-focused investors.
SCHD: A Basket of Defensive Stocks With Strong Track Records
SCHD is one of Charles Schwab's flagship ETFs, designed to provide exposure to high-quality U.S. companies with consistent dividend histories. The fund tracks the Dow Jones U.S. Dividend 100 Index, composed of 100 high dividend-yielding U.S. companies.
In recent years, SCHD has delivered solid performance, driven by healthy revenue and earnings growth from its high dividend-paying holdings, which mirror those in its benchmark index.
So far in 2026, SCHD has posted a year-to-date (YTD) gain of more than 13%, versus the S&P 500's loss of 0.37%. That outperformance reflects a portfolio that has benefited from investors' flight to safety: while tech stocks—and software names in particular—have lagged, SCHD's sector mix has rewarded shareholders.
The fund's largest allocation is energy (20.3%)—the top-performing sector this year—followed by consumer staples (18.5%), health care (15.5%), and consumer discretionary (10.4%). Technology rounds out the top five at 10.2%, a major reason SCHD has performed well in the early part of the year.
As evidence of investor confidence, the fund's short interest is just 0.17% of the float. Institutional investors have also been buying: SCHD saw inflows of $11.65 billion over the past 12 months, more than double outflows of $4.75 billion.
Performance aside, the dividend is a primary draw. SCHD currently yields 3.32%, or $1.04 per share annually.
VIG: Dividend Growth With a Dose of Tech Exposure
Defensive sectors have led the market higher this year, which has weighed on tech. For income investors who also want exposure to a potential tech rebound, VIG can be an attractive option.
Vanguard's Dividend Appreciation ETF has a sizable weighting to technology (25.5%), which has kept its YTD gain to just over 2%. However, with two Magnificent Seven companies and Broadcom (NASDAQ: AVGO) among its top five holdings, VIG stands to benefit if tech regains momentum later in the year.
In the meantime, VIG's exposure to financials (21.9%), health care (16.6%), and industrials (10.4%)—the market's fourth-best performing sector YTD—helps offset tech's drag.
VIG's dividend currently yields 1.57%, or $3.55 per share annually. Its short interest is 0.04%, lower than SCHD's, and institutional investors have contributed $15.66 billion to the fund over the past year, against outflows of $10.5 billion.
Boring Is Beautiful: Why Johnson & Johnson Is Beating the Tech Sector
Reported by Jeffrey Neal Johnson. Article Posted: 2/24/2026.
Key Points
- Johnson & Johnson has maintained an impressive streak of increasing its dividend payouts for generations, rewarding long-term shareholders with reliable income.
- Management is driving future expansion by focusing on high-growth pharmaceutical assets and cutting-edge medical technologies, such as robotics.
- Investors looking for shelter from market volatility benefit from a stock that historically moves much less than the broader market indices.
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While the technology sector faces a renewed wave of volatility driven by artificial intelligence (AI) trade flows and valuation concerns, a different story is unfolding in the healthcare sector. Investors fleeing the jittery price swings of high-growth tech stocks are finding shelter in a familiar name that is quietly outperforming. Johnson & Johnson (NYSE: JNJ) is trading near all-time highs of approximately $245 per share, creating a divergence that has caught Wall Street's attention.
This rally runs counter to the common perception of the healthcare giant as a slow-moving, staid stock. Over the last 30 days, shares have climbed roughly 14%, significantly outperforming the broader market during a period of uncertainty. That price action suggests institutional money is rotating out of riskier assets and placing a premium on stability, dependable cash flow, and operational execution.
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For investors watching the ticker today, Feb. 24, 2026, note an important calendar event: today is the ex-dividend date for Johnson & Johnson. The stock price will typically fall by the amount of the upcoming dividend payment—$1.30 per share—because of this mechanical adjustment. That move reflects the payout, not underlying business deterioration. For income-focused investors, this technical dip often presents an attractive entry point rather than a reason to sell.
64 Years of Unbroken Growth
The main case for holding Johnson & Johnson through turbulent market cycles is its enormous financial stability and role as a portfolio stabilizer. The company belongs to an elite group of equities known as Dividend Kings, firms that have increased their dividend for at least 50 consecutive years.
Johnson & Johnson has now raised its dividend for 64 consecutive years, a track record that spans multiple recessions, market crashes, and geopolitical shocks. That consistency is rare in a market often dominated by speculative growth stories.
The stock currently yields about 2.12%, based on an annual payout of $5.20 per share. While higher yields exist in the bond market or riskier sectors, the attraction here is the combination of steady income and relative safety. The dividend is backed by a large liquidity cushion: management projects free cash flow of roughly $21 billion in 2026. That level of cash generation helps ensure the company can continue paying shareholders, invest in research, and manage legal expenses without heavy borrowing.
For risk-averse investors, one of the most compelling metrics is the stock's Beta, which measures how a stock moves relative to the overall market (S&P 500). A Beta of 1.0 means a stock tends to move in step with the market. Johnson & Johnson's Beta is about 0.35, indicating it has historically been roughly 65% less volatile than the broader market. When tech stocks swing wildly, J&J tends to hold its ground. Adding JNJ to a portfolio heavy in technology can act as a mathematical shock absorber, reducing overall volatility while maintaining equity exposure.
Beyond the Patent Cliff: The Road to $100 Billion
Safe stocks are often assumed to be slow growers, but Johnson & Johnson is challenging that view with a strategic pivot that's producing results. Management is guiding for 2026 full-year revenue to exceed $100 billion for the first time in the company's history, along with adjusted earnings per share of about $11.53.
That growth stems from a reinvigorated pharmaceutical division, rebranded as Innovative Medicine. Investors had been concerned about the patent cliff for Stelara, a blockbuster immunology drug that lost exclusivity in 2025. Typically, when a top product faces generic competition, revenue can collapse. J&J has offset that decline through the rapid rise of new blockbusters.
Two key assets are driving this resilience:
- Darzalex: This oncology therapy is producing roughly $14 billion in annual sales and has become a core treatment for multiple myeloma worldwide.
- Tremfya: Positioned as a successor to Stelara, Tremfya recently reported strong three-year data on remission rates for ulcerative colitis—data that bolsters confidence the company can maintain market share in immunology as older drugs lose exclusivity.
The Tech in MedTech: High-Margin Technologies
Growth isn't limited to pharmaceuticals. The MedTech division has been refocused toward high-growth, higher-margin technologies that strengthen J&J's long-term earnings profile. A notable example is the integration of Shockwave Medical, acquired to modernize the cardiovascular portfolio.
Shockwave's intravascular lithotripsy (IVL) uses sonic pressure waves to break up calcified plaque in arteries—similar in concept to how kidney stones are treated. This represents a meaningful advance over traditional angioplasty balloons. By adding this technology, Johnson & Johnson has secured a high-growth asset that complements heart-recovery devices (such as those made by Abiomed) and its surgical businesses.
The company is also advancing in robotics. The submission of its Ottava robotic surgical system for FDA approval signals intent to compete in the expanding soft-tissue robotics market. These high-tech devices typically carry higher profit margins and foster sticky relationships with hospital systems, creating a long-term earnings tailwind beyond basic disposables or commodity surgical tools.
Addition by Subtraction: The Orthopedics Strategy
To sustain growth and improve margins, management is actively reshaping the corporate footprint. A major development is the potential separation or sale of the DePuy Synthes orthopedics business. While a spin-off was originally discussed, recent reports suggest the company is exploring a large-scale sale of the asset.
Divesting orthopedics would be an example of addition by subtraction. Orthopedics is a mature, lower-growth business compared with the booming fields of oncology and advanced cardiovascular devices. Shedding this slower unit would likely improve overall revenue growth rates and profit margins. A sale could also generate a substantial lump-sum payment—potentially billions of dollars—providing capital for acquisitions, debt reduction, or share buybacks.
Legal risks remain part of the picture. Johnson & Johnson continues to face litigation over talc products, with a recent $1.5 billion verdict keeping the issue in the headlines. A separate commercial lawsuit from Bayer over marketing claims related to prostate cancer drugs has added noise to the news cycle.
Still, the stock's recent rally indicates the market may be looking past these headlines. The bullish view is that Johnson & Johnson has the financial depth to manage these liabilities without disrupting operations. With more than $20 billion in cash and marketable securities, potential proceeds from an orthopedics sale, and roughly $21 billion in annual free cash flow, the company has a financial buffer capable of absorbing settlements. That strength makes legal matters a balance-sheet item rather than an existential threat to the dividend or the business.
Capital Preservation With Upside
Johnson & Johnson has evolved from a slow-moving conglomerate into a more focused, tech-forward healthcare company. By separating its consumer health division (Kenvue (NYSE: KVUE)) and potentially divesting its orthopedics business, management is streamlining operations to concentrate on higher-growth opportunities in pharmaceuticals and medical technology.
Although the stock is no longer a bargain—trading near all-time highs—it offers a blend of capital preservation and upside that can be hard to find elsewhere. The combination of a 64-year dividend growth streak, a very low volatility profile, and a clear path to $100 billion in revenue makes J&J a compelling option for 2026. For investors tired of the technology sector's unpredictability, Johnson & Johnson demonstrates that, in the current market environment, boring can be both beautiful and profitable.
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