Recession Royalty: Roundhill Debuts Fund Boasting Mega-Resistant Dividend Yields

how to prepare for a recession

Investors who want to tap an ever-flowing dividend stream have a new purpose-built exchange-traded fund (ETF) to consider. 

Roundhill Investment's latest ETF is a one-click solution to buy the market's “Recession Kings” of the market. On Thursday, November 2, The Roundhill S&P Dividend Monarchs ETF (“KNGS”) began trading today on the New York Stock Exchange, Arca. 

The fund invests in U.S. blue-chip companies, which have consistently increased their dividends for at least five decades. It will attempt to match the returns of the S&P Dividend Monarchs Index, in which consumer brands like Target, Coca-Cola, Johnson & Johnson, and Pepsi are among the top holdings.

“Considering there are not many companies that have been public since 1973, it's remarkable that these 30+ names have been in a position to consistently raise their dividends over the last 50 years…through times of war, bursting of multiple financial bubbles, and even a pandemic,” says Roundhill's Dave Mazza, who dubs these firms “Recession Kings.” 

2024 Looms

The new fund arrives as recession fears are mounting again. 

Recession has leapfrogged inflation as the chief worry for retail investors globally, according to latest Retail Investor Beat (RIB) from trading platform eToro. The study questioned 10,000 retail investors across 13 countries and found more than a fifth (22 percent) said they regard a potential recession as the largest risk to their positions, whilst 13 percent see inflation as more threatening. This flips the script from six months ago, when inflation was the primary concern (20 percent), with recession trailing (13 percent).

Regardless of whether a recession really hits next year, 2024 will bring other major changes. Nearly half (45%) of investors expect the presidential election to have a bigger impact on their portfolios than market performance, according to a new survey from the Nationwide Retirement Institute.

“As we get closer to the 2024 election, we're going to see more messaging and campaign ads that portray worst case scenarios, creating anxiety in investors that can lead to short-sighted, emotional decisions,” said Eric Henderson, President of Nationwide Annuity.

The election could potentially be more divisive than the last. Around three-quarters of voters have doubts about the age of President Joe Biden to serve four more years. Two-thirds are concerned about the multiple trials faced by former president Donald Trump, who is the leading Republican candidate and aims to run for office again. 

Investor jitters about the election may be overblown. Wall Street hardly blinked when the January 6 Capitol riots occurred in 2020. In fact, leading indices soared to new heights as the mayhem unfolded

As Roundhill management points out, the dividend performance of these target firms has stayed strong through all kinds of disasters over the decades and will likely weather whatever political tumult may come. Although, as always with dividend investing, past yield performance cannot guarantee future payouts.

KNGS carries an expense ratio of 0.35%.

Author: Liam Gibson

Bio:

Liam is an experienced journalist in Taiwan who has been covering politics, economics and finance professionally for almost five years. His writing has appeared in many leading publications in both the U.S., Asia, the Middle East, and elsewhere. He currently works as a finance writer for Wealth of Geeks. He formerly ran the Substack newsletter and podcast, Policy People