With recession estimates ranging from 15% to 40%, The Motley Fool says the State Street SPDR S&P Dividend ETF (SDY) could help cushion a downturn. Its case rests on a 25-year dividend-growth record and more than 37% of the portfolio in defensive sectors.
SDY tracks an index of S&P Composite 1500 companies that have raised dividends for at least 25 consecutive years. Of its 155 holdings, 68 are also S&P 500 Dividend Aristocrats, and some meet the Dividend King standard of 50 straight years of increases. Consumer discretionary and financial stocks make up 18.7% of the fund; energy and real estate together account for less than 8%.
The article says the Federal Reserve raised interest rates last week and that expectations were rising for another hike before year-end. Some experts cited bond-market developments as a reason not to dismiss recession risk in the coming months.
