The S&P 500 witnessed a record worst performance in the first half of 2022 and officially entered the bear market in mid-June. The benchmark index has lost 20% year to date. Moreover, UBS recently slashed its year-end price target for the S&P 500 to 4,150, down from its previous estimate of 4,850.

Furthermore, June inflation data came in higher than expected. The consumer price index rose 9.1% on a year-over-year basis last month, higher than May’s 8.6%. And the 75 bps federal rate hike in July seems inevitable.

The concerning macro environment is raising the odds of a recession. Morgan Stanley chief strategist Mike Wilson expects the S&P 500 to hover around as low as 3,000 by the 2022 end in case of a recession.

Amid the market uncertainties, defensive ETFs such as iShares Select Dividend ETF (DVY - Get Rating), Vanguard Dividend Appreciation Index Fund (VIG - Get Rating), and Invesco S&P 500 Low Volatility ETF (SPLV - Get Rating) could be wise additions to your portfolio.

iShares Select Dividend ETF (DVY - Get Rating)

DVY focuses on dividend-paying stocks, and its underlying index screens equities by factors such as dividend per share growth rate, dividend payout percentage rate, and dividend yield. It suits investors well for a long-term investment with minimum volatility.

With $21.28 billion in assets under management (AUM), DVY’s top holdings include International Business Machines Corporation (IBM), with a 2.17% weighting, followed by Altria Group, Inc. (MO) at 2.09%, and Valero Energy Corporation (VLO) at 2.07%. It currently has 101 holdings in total.

Over the past three months, the ETF’s net inflows were $1.03 billion. In addition, its 0.39% expense ratio compares favorably to the 0.50% category average.

DVY pays a $3.63 annual dividend, which yields 3.08% at the prevailing share price. Its four-year average dividend yield stands at 3.50%. Its dividends have increased at a 2.5% CAGR over the past three years and 5.2% over the past five years. Over the past year, the fund has gained marginally.

DVY has a B grade for Buy & Hold in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

DVY is ranked #30 out of 86 ETFs in the B-rated Large Cap Value ETFs group. Click here to see all the DVY ratings.

Vanguard Dividend Appreciation Index Fund (VIG - Get Rating)

VIG tracks the performance of the NASDAQ US Dividend Achievers Select Index and offers exposure to dividend-paying large-cap companies that exhibit growth characteristics within the U.S. equity market.

It has 291 holdings in total. Johnson & Johnson (JNJ) has a 3.84% weighting in the fund as its top holding, followed by Microsoft Corporation (MSFT) at 3.82% and UnitedHealth Group Incorporated (UNH) at 3.80%.

VIG has $61.02 billion in AUM. Its net inflows came in at $1.10 billion over the past three months. Its 0.06% expense ratio is lower than the 0.37% category average.

VIG pays a $2.86 dividend annually, yielding 1.97% at the current price. Its four-year average dividend yield stood at 1.76%. Its dividends have increased at an 11.6% CAGR over the past three years and 8.4% over the past five years. The fund has lost marginally over the past month.

VIG has a B grade for Peer. It is ranked #72 out of 272 ETFs in the Large Cap Blend ETFs group. Click here to see VIG’s rating for Trade and Buy & Hold.

Invesco S&P 500 Low Volatility ETF (SPLV - Get Rating)

SPLV tracks an index consisting of some of America’s largest companies, usually known as ‘Blue Chips’; they are some of the country’s most famous and profitable companies. It is one of the safest and most stable in the equity world and tends to outperform in a bear market.

The fund has $9.67 billion in AUM. Its top holdings include PepsiCo, Inc. (PEP) with a 1.34% weighting, Verizon Communications Inc. (VZ) with 1.29%, and JNJ with 1.28%. In addition, it has 102 holdings in total. Its net inflows came in at $767.05 million over the past three months. Its 0.25% expense ratio is lower than the 0.67% category average.

SPLV pays a $1.21 annual dividend, which yields 1.95% at the prevailing share price. Its average four-year dividend yield stands at 2.02%. SPLV’s dividends increased at a 3% CAGR over the past three years and a 6.6% CAGR over the past five years. Over the past month, the stock has lost marginally.

SPLV’s POWR Ratings reflect solid prospects. It has an overall B rating, equating to a Buy in our proprietary rating system.

In addition, it has an A grade for Peer and a B for Buy & Hold. SPLV is ranked #6 out of 86 ETFs in the B-rated Large Cap Value ETFs group. Click here to check all the SPLV ratings.

DVY shares were trading at $116.52 per share on Wednesday morning, down $0.87 (-0.74%). Year-to-date, DVY has declined -3.63%, versus a -19.33% rise in the benchmark S&P 500 index during the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries. More...

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