If a Stock Market Correction Is Coming, This 1 ETF Could Be the Smartest Buy Right Now
Investors tend to underestimate the benefits of dividend stocks in a bull market. But they come in really handy when the market starts to turn lower.
If a Stock Market Correction Is Coming, This 1 ETF Could Be the Smartest Buy Right Now
Overview
The S&P 500's Shiller CAPE ratio, which measures the index's current price relative to inflation-adjusted earnings over the past 10 years, just hit 42. The last time it rose that high, the tech collapse in 2000 soon followed.
While strong corporate earnings growth is supporting the market here, stocks could take a hit if the narrative changes. Inflation is well above the Federal Reserve's target. GDP growth has slowed substantially over the past two quarters. President Donald Trump is trying to restart his tariff strategy. Any or all of these factors could be the catalyst to send stock prices sharply lower. With the S&P 500 nearly as expensive as it has ever been, according to the Shiller CAPE ratio, there's little room for error.
Details
There are ways, however, to protect your portfolio. By pivoting to more defensive equities, investors can mitigate downside risk and maybe even generate a little extra income on the side. That's why the Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) becomes really attractive during a correction. Its robust selection strategy produces a portfolio of durable, quality companies with strong dividend yields.
Source
Originally published at www.fool.com.
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