The Best Dividend ETF to Buy With $1,000 Right Now
2026-07-16 15:15
•David Dierking •The Motley Fool
•••••• ••• Axe Capital view
Why Dividend ETFs Make More Sense Than Tech Right Now
South African investors should take note of dividend-focused strategies amid global tech jitters and inflation concerns.
Tech stocks have lost their luster recently. The 25% drop in IBM’s share price after a profit warning should serve as a warning for anyone blindly throwing money into tech-heavy funds like the S&P 500. For us on the JSE, this rings a bell because JSE titan Naspers and its offshoot Prosus have significant tech exposure, and their valuations have been unpredictable. Dividend-focused strategies, like the Schwab U.S. Dividend Equity ETF (SCHD), which has beaten the S&P 500 by 9% so far this year, offer a more defensive approach with a decent 3.3% yield and strong balance sheet companies. Locally, this suggests a tilt toward the more reliable dividends from banks like Standard Bank or FirstRand, or consumer names like Shoprite and Woolworths. The rand’s recent volatility (USD/ZAR flux) only amplifies the need for defensive income earners rather than risky growth plays. If inflation softens or tech receives a fresh catalyst, this call could be wrong, but for now, patience with quality yields pays off. this is just my opinion and not financial advice
Trim exposure to high-growth tech plays like Naspers/Prosus and increase allocation to South African dividend payers such as FirstRand and Shoprite. Watch USD/ZAR closely as currency swings could offer tactical entry points.
- FirstRand
- Shoprite
- USD/ZAR
- Tech rebounds sharply on earnings recovery
- Rand strengthens unexpectedly reducing foreign currency hedge benefits
7/10
The article recommends the Schwab U.S. Dividend Equity ETF (SCHD) as a better investment choice over tech-heavy S&P 500 funds. With tech stocks showing signs of fatigue and IBM's 25% drop after missing earnings expectations, the author advocates for a defensive approach focused on high-quality dividend-paying companies with strong balance sheets. SCHD has outperformed the S&P 500 by 9% year-to-date with a 3.3% yield and consistent dividend growth since 2011.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: David Dierking
Categories: Macro, Inflation, Rates, Equities, Earnings, Capital Returns
Tickers: SCHD, VOO, IBM
Sentiment: Mixed - Recommended as the best investment choice for $1,000. Praised for strong balance sheets, consistent dividend growth (10% annualized since 2011), defensive sector allocation, and outperformance of 9% year-to-date versus S&P 500. Criticized for excessive tech concentration (40% in tech sector and top 10 holdings), creating unappealing downside risk. Author recommends avoiding it in current market conditions.
Keywords: dividend ETF, tech concentration risk, defensive investing, dividend growth, earnings warning, inflation hedge
Insights:
- SCHD: Positive: Recommended as the best investment choice for $1,000. Praised for strong balance sheets, consistent dividend growth (10% annualized since 2011), defensive sector allocation, and outperformance of 9% year-to-date versus S&P 500.
- VOO: Negative: Criticized for excessive tech concentration (40% in tech sector and top 10 holdings), creating unappealing downside risk. Author recommends avoiding it in current market conditions.
- IBM: Negative: Used as a cautionary example after falling 25% on second-quarter earnings warning, illustrating the substantial risk when tech earnings growth peaks or reverses.