“Safety first” should be the credo of all investors. Shielding your portfolio from the ups and downs of the stock market isn’t always a simple matter, though. Thankfully, you can instantly add a layer of safety while also leveraging compounding opportunities with the Fidelity High Dividend ETF (NYSEARCA:FDVV | FDVV Price Prediction).
Passive income investors flock to dividend ETFs, and who could blame them? There’s no feeling quite like seeing those cash dividend distributions show up in your investment account.
And when you reinvest your dividends, the magic of compounding can help your account grow over time. Fidelity’s management certainly understands the importance of safety and income accumulation — and with the FDVV ETF, you’ll have a set-it-and-forget-it fund that can securely grow your account for many years.
What’s in the FDVV ETF?
We wouldn’t be justified in calling the Fidelity High Dividend ETF “safe” unless we looked inside the fund and saw what’s actually in there. As it turns out, FDVV will reassure cautious investors because its holdings include large, familiar, and successful businesses.
Granted, Fidelity’s High Dividend ETF isn’t as broadly diversified as the S&P 500 index, which comprises approximately 500 stocks. On the other hand, with 123 total holdings, FDVV includes more stocks than the 30-member Dow Jones Industrial Average and the 100-member NASDAQ 100 index.
Technology firms might not always be the biggest dividend payers, but a fully diversified fund ought to include some well-known tech names. The Fidelity High Dividend ETF definitely checks that box as its top three holdings are Apple (NASDAQ:AAPL) (5.39% of the fund’s weighting), Microsoft (NASDAQ:MSFT) (4.57%), and NVIDIA (NASDAQ:NVDA) (4.35%).
Don’t worry about Fidelity’s High Dividend ETF being too tech-heavy, though. Other top holdings in the fund include financial firms like JPMorgan Chase (NYSE:JPM) (2.45% of the fund’s weighting) and Visa (NYSE:V) (2.43%), as well as consumer goods mainstays like Procter & Gamble (NYSE:PG) (2.21%) and Coca-Cola (NYSE:KO) (2.18%).
Sure, there’s some overlap between the Fidelity High Dividend ETF and the S&P 500 and NASDAQ indexes. As we’ll discover in a moment, however, the FDVV ETF stands out because of its focus on dividend-paying firms.
For now, just consider that Fidelity’s High Dividend ETF tracks the performance of the Fidelity High Dividend Index, which generally sticks to very large businesses with staying power. That’s a crucial safety feature because established companies like JPMorgan Chase and Coca-Cola can withstand volatile economic conditions — and this could be highly relevant in 2025, a somewhat turbulent year so far.
Big Yield at a Not-so-Big Price
Another selling point of the Fidelity High Dividend ETF is its impressive yield. From Exxon Mobil (NYSE:XOM) (2.31% of the fund’s weighting) to PepsiCo (NASDAQ:PEP) (1.9%), you’ll get exposure to generous and consistent dividend distributors when you buy FDVV.
As of April 22, the FDVV ETF offers a forward annual dividend yield of 3.28%. That’s a big yield for a diversified fund, and it’s an added safety feature because quarterly cash dividend payments can slightly cushion your portfolio when the share price is down.
Assuming Fidelity doesn’t cut the dividend of the fund (and there’s no particular reason to believe there will be a dividend cut this year), the Fidelity High Dividend ETF’s 3.28% annualized yield will more than make up for the fund’s management fees. Currently, FDVV’s annual expense ratio is just 0.16% per year, so this dividend-focused fund won’t overcharge you for all of its safety features.
Think about it: the FDVV ETF’s dividend yield minus its expense ratio is 3.12%. Now, consider the potential for compounding wealth if you bought the Fidelity High Dividend ETF, held it for years, and consistently reinvested the dividend distributions. That’s a formula for portfolio growth without sacrificing safety over the long term.
Brilliant Because It’s Resilient
Additionally, FDVV is a reliable safe-haven asset for these uncertain times because it’s relatively resilient. This makes sense, since famous large-cap dividend payers tend to be rock-solid companies that respect their shareholders even when the economy is shaky.
How can we put the Fidelity High Dividend ETF’s resilience to the test? There’s no crystal ball here to predict the future, but we know that FDVV managed to practically double in price over the past five years.
And bear in mind, this powerful price performance doesn’t include the fund’s dividend payments and the effect of compounding with reinvestment. So, your five-year total returns would have been quite noteworthy with Fidelity’s High Dividend ETF.
There’s no way to know what the next five, 10, or 20 years will look like for the economy and markets. It’s practically guaranteed, though, that there will be asset-price fluctuations along the way.
To help you weather the storms that may come, feel free to put a few shares of the Fidelity High Dividend ETF in your portfolio. With a diversified mix of large-map market leaders and proven dividend yielders, FDVV can bring you a safe-haven holding for the turbulence of today and countless tomorrows.
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