Macro and geopolitical worries are rising, and even a “safe haven” like gold has not been spared from the wave of recent choppiness. Whether it’s the AI disruptive impact (think the Citrini report) or the Iran-U.S. situation, it’s quite unsettling to think about putting more money into the stock markets this March.
As the spring season approaches, though, there are reasons to believe that the stock market can start to warm up alongside the weather. Either way, there’s risk with timing plunging stocks as macro concerns soar, and that’s why the safety trade might outperform for the time being, especially if the Iran-U.S. war lasts for longer than expected.
In this piece, we’ll look at a trio of safety plays that still stand out as relatively affordable even after the past week’s continued rotation from momentum and into low beta defensiveness.
Schwab U.S. Dividend Equity ETF
The Schwab U.S. Dividend Equity ETF (NYSEARCA:SCHD) is shaping up to be a great bet to ring in 2026, with shares up close to 13% in the first two months of the year. Of course, the past month has seen the Schwab U.S. Dividend Equity ETF go sideways, but what’s most enticing is that the ETF has side-stepped the latest turmoil facing broader markets, especially the tech-heavy Nasdaq 100.
It feels like the Schwab U.S. Dividend Equity ETF was built to thrive in environments like these. The big question moving forward is whether the ETF can continue holding its ground as the S&P 500 starts to come in. For those who don’t want to overweight bonds, this dividend ETF, which yields 3.3%, stands out as a solid bet. With a good mix of energy producers, telecom firms, consumer staples, and defense stocks, this dividend ETF looks more or less like a great pick-up as the market terrain gets tougher.
State Street Utilities Sector SPDR ETF
For those comfortable with betting big on a single sector, the State Street Utilities Sector SPDR ETF (NYSEARCA:XLU) looks like a nice place to hide out as the volatility storm moves in. Shares are up over 8% year to date, thanks in part to the rotation to safety as well as increased enthusiasm for the utility play’s role in powering the AI revolution.
When it comes to stable dividends, the utilities are a fantastic, albeit obvious, place to consider putting new money to work, even if the price of admission is skewing towards the higher end. Underneath the hood of the popular utility ETF are a slew of renewable energy firms as well as regulated utilities and firms doing their part to renew the so-called nuclear renaissance. As the utilities look to outshine the markets for a while longer, perhaps it makes sense to make the rotation.
Vanguard International High Dividend Yield Index Fund ETF
Finally, the Vanguard International High Dividend Yield Index Fund ETF (NASDAQ:VYMI) combines two great factors for making it through a choppier market. The global focus and dividends stand out as an interesting place to be for underdiversified portfolios looking to reduce the day-to-day choppiness. You’re not just getting exposure to international yield (3.3%), though; you’re also getting a great value (14.4 times trailing price-to-earnings) as well as a marginally lower beta (0.90 at writing).
In other words, the Vanguard International High Dividend Yield Index Fund ETF could be considered an international, lower-volatility, value, and dividend-focused ETF all in one. While all these traits don’t guarantee safety from the next market correction, I do think they help improve upon the risk/reward of one’s portfolio, especially one that’s too heavy in the S&P 500 or the Nasdaq 100, the latter of which seems to be springing us forward into a correction.
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