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When you compare it to the 9% loss for the S&P 500 (SPY) or the 13% decline for the Nasdaq 100, dividend ETFs actually did really well in April. Two of the largest dividend ETFs out there, the Vanguard Dividend Appreciation ETF (VIG) and the Vanguard High Dividend Yield ETF (VYM), lost just 5% and 4%, respectively. With the markets turning south, investors pivoted back into more defensive investments and that meant dividend ETFs found a great deal of renewed interest for the first time in a while.

The biggest reason was the return of several sectors and themes that dividend ETFs tend to be overweight in. Utilities and consumer staples were among the best-performing sectors of the month, but healthcare and real estate also outperformed the S&P 500 by a good 4-5%. Low volatility had one of its best months by beating the index by more than 6%.

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That didn't necessarily translate into gains for most dividend ETFs, but it sure did offer some nice downside protection. There's reason to believe that the trend could continue as well. There's still pressure on Treasury yields to move higher. The economy is showing strong signs of slowing quickly and the Fed's upcoming rate hike cycle could be enough to push us into recession. That's not necessarily the recipe for gains in equities, but it does suggest that dividend payers might fare comparatively better.

Here's the list of the best performing dividend ETFs for April 2022.

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Just two dividend ETFs managed to produce a positive return in April - the Legg Mason International Low Volatility High Dividend ETF (LVHI) and the WisdomTree Japan Hedged SmallCap Equity ETF (DXJS). You may ask how two foreign equity ETFs managed to pull this off, but both developed and emerging markets beat the S&P 500 in April by about 2-3% each. LVHI had two things going for it. It focused on low volatility stocks and had a currency hedge against the rising dollar. Japanese small-caps don't really fall into the low volatility category, but the currency hedge also helped it quite a bit.

There are actually a lot of currency-hedged ETFs that made the list. The U.S. dollar index gained nearly 5% on the month, putting non-hedged international ETFs at an immediate disadvantage. Unless your fund was hedged against the rising dollar or at least had a global strategy (instead of just focusing on foreign stocks only), there was no chance it was landing on last month's list.

We also see the return of the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD). If you've been a reader here in the past, you'll know this is one of my favorite funds, but it's also one that tends to have performance that's on either one end of the spectrum or the other. When growth stocks are in favor, SPHD tends to underperform badly. When dividend and low volatility stocks are in favor, as they were in April, this fund does really well. It only lost a mere 1% last month and demonstrated it's a winner in the right environment.

Interesting to see the QRAFT AI-Enhanced U.S. High Dividend ETF (HDIV) crack the list. The issuer uses a proprietary algorithm for its security selection, so it's a bit of a black box, but there is some history to AI being able to boost returns. HDIV is just over two years old, but last month's performance has it now beating the S&P 500 since its inception.

Sometimes, even the simplest strategies work out well. The Invesco Dow Jones Industrial Average Dividend ETF (DJD) takes all of the dividend-paying stocks from the Dow and weights them according to their dividend yield. Think of it as somewhat similar to the old Dogs of the Dow strategy. High yielders had a relatively strong month overall, so a concentrated yield-weighted portfolio like this one had a good chance of performing well.

Other ETFs worth noting:

This is the 2nd straight month that no Vanguard ETF has appeared on the list.

Among the largest dividend ETFs cracking the April list were the ALPS Sector Dividend Dogs ETF (SDOG), the SPDR Portfolio S&P 500 High Dividend ETF (SPYD), the iShares Core High Dividend ETF (HDV) and the SPDR S&P Dividend ETF (SDY).

The Pacer Global Cash Cows Dividend ETF (GCOW) does it again! It was the top performing dividend ETF for the 1st quarter of 2022 and nearly cracks the top 10 list again in April.

The VictoryShares U.S. Large Cap High Dividend Volatility Weighted ETF (CDL) and the VictoryShares U.S. Equity Income Enhanced Volatility Weighted ETF (CDC) were two funds I profiled just recently as good options for lowering portfolio volatility. Both funds had decent months in April, but have strong long-term track records. The VictoryShares Dividend Accelerator ETF (VSDA) is right next to them on the list.

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