3 Steady ETFs for Cautious Investors Facing Market Turbulence

Key Points

• Trade war fears and economic uncertainty have rattled investor confidence, pushing growth stocks into a sharp pullback.
• With volatility surging, high-quality ETFs that blend steady dividends and broad market exposure offer a reliable strategy for long-term growth.
• SCHD, VYM, and SPHD stand out for cautious investors, providing strong dividend yields, low volatility, and defensive sector exposure.

As the U.S. stock market stumbles into March 2025, the mood has quickly shifted from soft landing to bracing for impact. Fueled by tariff threats and tit-for-tat rhetoric, a brewing trade war has slammed the brakes on investor confidence while murky economic signals stoke recessionary dread. 

Add to that the air hissing out of high-flying growth stocks, with the Magnificent Seven, those once-unstoppable tech titans, taking a brutal hit from fears of significant AI CapEx spending and whispers of overvaluation, and it’s no wonder portfolios are feeling the pinch. The Dow’s wobbles and the Nasdaq’s nosedive aren’t just noise; they might be a wake-up call.

Chasing the next big stock or theme, whether AI disruptors or space stocks, might thrill the speculators, but for those who’d rather sleep peacefully at night than sweat every headline or price movement, it’s a non-starter. That’s where high-quality ETFs with an income twist come in—a steady, no-drama way to secure long-term growth while collecting or reinvesting reliable dividends without constantly second-guessing market swings. 

Warren Buffett, the S&P 500 index fund’s biggest cheerleader, has long preached this gospel: “For most people, the best thing to do is own the S&P 500 index fund.” That wisdom hits harder than ever in today’s market environment of significant uncertainty. 

So, let’s unpack three ETFs that shine for cautious investors. Blending broad market exposure with reliable income, they’re built for the long game and offer a lifeline to stability amid the recent turbulence in the stock market.

SCHD: A Flagship Dividend ETF From Charles Schwab

The Schwab US Dividend Equity ETF NYSEARCA: SCHD stands as one of Charles Schwab's flagship offerings. It is designed to expose investors to high-quality U.S. companies known for their consistent dividend payouts.

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The fund tracks the Dow Jones U.S. Dividend 100 Index, which comprises 100 high dividend-yielding U.S. companies. 

What sets SCHD apart is its rigorous selection process, prioritizing companies with a strong commitment to rewarding shareholders through sustained and growing dividends. To qualify, a company must have at least ten consecutive years of uninterrupted dividend payments, effectively filtering out businesses with inconsistent dividend histories or those vulnerable to economic volatility.

SCHD maintains a well-balanced portfolio, with its top three sectors being healthcare (17%), consumer staples (15%), and financials (14%). The ETF currently boasts an impressive 9.17% dividend yield and an annual dividend of $2.56 per share, making it an attractive option for income-focused investors seeking reliable returns.

VYM: A Strategic Play on High-Dividend U.S. Stocks

The Vanguard High Dividend Yield ETF NYSEARCA: VYM offers investors a strategic way to access high-dividend-paying U.S. companies.

It tracks the FTSE High Dividend Yield Index, which selects companies with substantial dividend payouts while excluding REITs. The ETF weights its holdings by market capitalization. 

With $60 billion in assets under management (AUM), VYM is slightly smaller than SCHD by about $10 billion. It also features a low net expense ratio of 0.06% and a solid dividend yield of 2.5%.

Despite broader market challenges, with the S&P 500 dipping into the red year-to-date, VYM’s defensive appeal has allowed it to remain resilient, posting a modest gain of nearly 2%.

The ETF’s top holdings include Broadcom, JPMorgan, and Exxon Mobil, collectively accounting for almost 12% of the fund’s total weighting. Analysts covering more than 61% of VYM’s portfolio have assigned an aggregate rating of Moderate Buy, reinforcing its reputation as a stable option for dividend investors.

SPHD: A Balanced Approach to High Dividends With Low Volatility

The Invesco S&P 500 High Dividend Low Volatility ETF NYSEARCA: SPHD focuses on large-cap equities, tracking a dividend-yield-weighted index of the least volatile, highest dividend-yielding stocks within the S&P 500.

This ETF combines steady income with reduced market risk, offering investors a balanced approach to dividend investing. 

SPHD delivers a noteworthy 3.45% dividend yield and has demonstrated its defensive nature by falling just 4.37% from its 52-week high, outperforming the broader S&P 500, which has declined nearly 6% from its peak.

SPHD’s top holdings include Altria Group, Verizon Communications, Pfizer, and Realty Income, reflecting the fund’s low-volatility strategy. It has a net expense ratio of 0.3% and manages $3.47 billion in AUM.

Liquidity-wise, SPHD has an average daily trading volume of around 500,000 shares, noticeably lower than SCHD and VYM, which average well over one million traded daily.