Dividend-stock ETFs have surged past the S&P 500, rallying amid a recent drop in bond yields

Dividend stocks have been a bright spot in a volatile October on Wall Street.

The stock market has been jittery this month, but one area is shining amid all the volatility.

As investors have dumped once-hot semiconductor stocks and other artificial-intelligence-linked names, shares of companies that pay relatively high dividends have taken off.

Since the start of October, the iShares Core High Dividend ETF HDV has climbed 8.8%, while the S&P 500 SPX has edged up just 0.3% as the index's largest sector, information technology XX:SP500.45, has fallen 3.7%, according to FactSet data.

A recent pullback in bond yields has delivered an added boost by making the dividends these stocks pay out more attractive in comparison.

"That big swing definitely helped dividend-paying stocks," said Ayako Yoshioka, director and senior investment strategist at Wealth Enhancement, in an interview, citing the recent drop in bond yields amid the tech selloff. Companies that pay large dividends tend to have solid operating cash flows and strong balance sheets, even if they are perceived to be more stodgy than the latest hot tech stock.

"High-dividend stocks continue to rise in response to falling rates," with the relative strength of the iShares Core High Dividend ETF recently reflecting "powerful underlying demand," Tom Essaye, founder and president of Sevens Report Research, said in a note Monday.

The success that high-dividend-paying stocks have seen this month has left one iShares Core High Dividend ETF in overbought territory, according to at least one closely followed technical indicator. Even still, such a strong breakout in momentum suggests investors should consider buying more on a pullback, Essaye said.

On Monday, the iShares Core High Dividend ETF ended nearly flat at $30.41, continuing to trade above its 50-day moving average of $29.19, FactSet data showed. The ETF's top five holdings as of Friday were energy producer ExxonMobil Holdings (XOM), Chevron $(CVX)$, healthcare company AbbVie $(ABBV)$, consumer-staples giant Procter & Gamble (PG) and Verizon Communications (VZ).

A recent surge in bond yields had weighed on most corners of the market outside the tech space. But with yields looking like they have peaked for now, investors should consider adding more dividend-paying stocks to their portfolio, Essaye said.

When bonds sell off, their yields climb. The yield on the 10-year Treasury note BX:TMUBMUSD10Y settled Monday at 4.987%, after falling for three straight weeks, according to Dow Jones Market Data.

The recent popularity of dividend stocks comes at a time when the dividend yield of the broader S&P 500 has shrunk substantially, as the index has increasingly become dominated by a handful of megacap growth stocks that don't offer generous dividends.

The S&P 500, whose largest sector by far is tech, had a forward dividend yield of 1.38% as recently as Friday, according to Dow Jones Market Data. That was only slightly above the 2026 low of 1.33% on Aug. 13, which was the lowest on record based on FactSet data going back to early 2000.

The iShares Core High Dividend ETF has seen a big total return this year of 28.2% through Monday, FactSet data showed. That total return figure includes both dividends paid and price appreciation.

Other dividend funds have also put in a strong October showing. For example, shares of the Schwab U.S. Dividend Equity ETF SCHD have risen 8.5%, bringing its total 2026 gain to almost 32% through Monday. By comparison, the S&P 500 has climbed just 12.1% so far this year.

Ken Jimenez contributed

-Christine Idzelis