Between rising geopolitical tensions and ongoing economic uncertainty, fear has started to creep back into the market. As a result, some investors are choosing to pull their money out altogether. However, this is often a costly mistake. Selling during periods of volatility can lock in losses and prevent investors from participating in the eventual recovery.

Why Dividend ETFs Can Help Reduce Market Volatility

It’s important to remember that markets have endured far worse pullbacks in the past—and have consistently bounced back over time. Instead of abandoning the market, a more effective strategy is to stay invested while reducing risk through diversification. One way to do that is by adding income-generating dividend ETFs to your portfolio. These funds can help investors generate cash flow while maintaining exposure to equities during uncertain periods.

Fidelity High Dividend ETF Combines Income and Growth

The Fidelity High Dividend ETF (NYSEARCA: FDVV) is a solid choice for investors seeking a balance of income and growth. With an expense ratio of just 0.16% and a yield of about 3.26%, FDVV tracks the Fidelity High Dividend Index. This index focuses on large- and mid-cap companies that not only pay dividends but are also expected to grow those payouts over time.

The fund holds a diversified mix of well-established companies across multiple sectors. Some of its top holdings include Apple Inc. (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), NVIDIA (NASDAQ: NVDA), JPMorgan Chase (NYSE: JPM), Visa Inc. (NYSE: V), Exxon Mobil (NYSE: XOM), Philip Morris International (NYSE: PM), and Procter & Gamble (NYSE: PG).

iShares Core High Dividend ETF Focuses on Stability

Another strong option is the iShares Core High Dividend ETF (NYSEARCA: HDV), which tracks an index of relatively high-dividend-paying U.S. equities.

HDV stands out for its low expense ratio of 0.08% and a yield of around 3.3%. The fund focuses on financially healthy companies with strong dividend sustainability, making it an attractive option for conservative investors.

The ETF holds about 75 companies, including major names like Exxon Mobil, Johnson & Johnson (NYSE: JNJ), Chevron Corporation (NYSE: CVX), AbbVie (NYSE: ABBV), AT&T (NYSE:T), and The Coca-Cola Company (NYSE: KO). Because of its focus on stable, high-quality dividend payers, HDV can help reduce volatility while providing consistent income—an appealing combination during uncertain market conditions.

JPMorgan Nasdaq Equity Premium Income ETF Offers Double-Digit Yield Potential

For investors seeking higher income potential, the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ: JEPQ) is one of the most compelling options available today.

JEPQ offers a significantly higher yield—around 10%—and is designed to deliver monthly income while maintaining exposure to U.S. large-cap growth stocks.

What sets JEPQ apart is its use of a covered-call strategy. The fund generates income by selling options on Nasdaq-linked securities while holding a portfolio of large-cap growth companies. The premiums collected from these options are then distributed to investors, creating a steady stream of income.

This approach allows investors to benefit from income generation while still participating, to some extent, in the growth potential of the Nasdaq. However, it’s worth noting that covered-call strategies can limit upside during strong bull markets.

Dividend ETFs Can Help Investors Stay Defensive Without Leaving the Market

In times of market volatility, staying invested is crucial. Rather than reacting emotionally and exiting the market, investors can strengthen their portfolios by incorporating diversified, income-producing dividend ETFs.

Funds like FDVV, HDV, and JEPQ offer different approaches to balancing income, diversification, and downside protection. Some prioritize dividend growth and stability, while others focus on maximizing monthly income through option-based strategies. For investors looking to remain invested during uncertain conditions, dividend ETFs can provide a practical way to reduce portfolio volatility while continuing to generate cash flow and participate in long-term market growth.

The company’s fourth-quarter 2025 report showed that its focus on delivering value applies to both consumers and shareholders. Kimberly-Clark emphasized its ongoing transformation, balancing cost controls, volume stabilization, and strategic growth bets – most notably its ongoing acquisition of Kenvue (NYSE: KVUE), the former consumer health division of Johnson & Johnson (NYSE: JNJ).  

That acquisition, along with solid cash generation and a well-supported dividend, won’t make KMB stock a target of growth investors. But it strengthens the argument that value investors should be paying attention.  

Meeting the Consumer Where They Are 

“Acquiring Kenvue is a powerful next step in our transformation that will compound the momentum we’re already delivering across Kimberly-Clark. Importantly, it will also enable us to raise the standard of care for billions of people around the world,” said Kimberly-Clark Chairman and CEO Mike Hsu. 

That strategic move comes as the company continues adjusting to shifting consumer spending. The fourth quarter reflected a stable-to-improving environment for essential product categories but continued sensitivity to price. Net sales came in at roughly $5.1 billion, up slightly from the prior year, with organic revenue growth of 1% driven by modest volume improvement and favorable product mix in tissues and personal care

Kimberly-Clark’s pricing discipline, cost productivity, and focus on “value-advantaged innovation” helped protect margins. Operating profit rose 5% year over year, aided by the ongoing implementation of its FORWARD program, which targets better supply chain productivity and marketing efficiency. While the consumer backdrop remains cautious, Kimberly-Clark’s ability to meet shoppers “where they are”—offering affordable essentials with strong brand loyalty—positions it well in a slow-growth economy. 

Strength in Margins and Cash Flow 

For a mature consumer staples name, margin expansion and consistent cash flow are the engines of long-term shareholder return. Kimberly-Clark delivered on both fronts in Q4. The company’s gross margin expanded by 60 basis points to 35.7%, reflecting moderating input costs, particularly in pulp and resins, and continuing synergies from manufacturing optimization. 

Free cash flow totaled over $600 million in the quarter, supporting the board’s decision to raise the annual dividend to $5.12 per share. The current yield of about 5.0% is among the highest in the consumer goods sector and is consistent with the company’s long-term capital allocation framework. 

Looking ahead, management guided to low single-digit organic sales growth in 2026 and mid-single-digit adjusted EPS growth on a constant-currency basis. That guidance leans conservative but reflects confidence that the business can maintain pricing power while balancing cost headwinds and global volatility. For dividend investors, the stability of those metrics underpins the company’s reputation as a “Dividend Aristocrat”—a company that has raised its payout annually for more than 50 years. 

Challenges to the Thesis

Despite a solid operating foundation, KMB stock still faces notable headwinds. One is valuation relative to growth. Shares trade around 17 times forward earnings, a discount to peers like Procter & Gamble (NYSE: PG) or Colgate-Palmolive (NYSE: CL), but that discount is partly justified by KMB’s slower revenue trajectory. While organic volumes have stabilized, broad-based demand acceleration remains elusive, especially in developed markets where category saturation limits upside. 

Inflationary and currency pressures also persist. Commodities may have moderated, but energy and packaging input costs remain volatile, and foreign exchange swings continue to trim reported revenue growth given Kimberly-Clark’s large international footprint. 

Finally, the Kenvue integration—if completed as planned—brings both strategic potential and execution risk. Integrating overlapping product categories and navigating antitrust scrutiny could pressure near-term results. Investors will also be watching for updates on financing, as the company’s net debt position will likely rise to fund the acquisition, potentially constraining future share repurchases. While none of these issues derail the long-term value case, they suggest limited multiple expansion in the short run. 

How to Play KMB Stock 

Using his proprietary quantitative model, Joshua Enomoto forecasted that KMB stock may be rangebound in an area between approximately $98 and $105. At the close of trading on the day of earnings, the stock is around $100, near the midpoint of that range.  

That technical setup aligns with the broader consensus view. Wall Street analysts remain mildly bullish on KMB, with a consensus price target of $119, implying roughly 18% upside from current levels. When combined with a 5% dividend yield, the total return potential could reach the mid-teens annually, an attractive profile for investors seeking a lower-volatility equity anchor. 

For tactical investors, KMB’s near-term trading range might favor “buying the dips” around $98–$99 to capture the dividend while waiting for potential re-rating catalysts such as synergy updates from Kenvue or better-than-expected volume growth in developing markets. From a portfolio construction standpoint, KMB can also serve as a defensive income play, balancing higher-beta holdings in technology or cyclicals. 

The company’s disciplined capital allocation, proven pricing strategy, and focus on “value for consumers and shareholders alike” make KMB a steady compounder rather than a momentum name. That makes it appealing for long-term investors who prioritize stability, yield, and consistent capital returns over rapid capital appreciation. 

Conclusion: Value in Stability 

While Kimberly-Clark’s results didn’t ignite excitement in the broader market, they reinforced a dependable narrative: this is a company that delivers reliable returns even in uncertain times. Between its substantial dividend yield, improving margins, and the transformative Kenvue deal, KMB stock offers investors a mix of income and defensive resilience. 

It’s unlikely to break out dramatically in the short term, but for those looking to anchor a portfolio with steady, inflation-beating cash flows, Kimberly-Clark may be one of the few true “value” names left in consumer staples. 

Understandably, the global equity markets stumbled badly amid the Trump administration’s aggressive tactics, particularly the threat of tariffs on key European partners. While the pugnaciousness should not be ignored, it’s worth reminding ourselves of the so-called TACO trade, a meme that stands for “Trump Always Chickens Out.” As unorthodox and imprudent as this approach may be, it appears to be part of the president’s strongman aura that he has carefully cultivated.

Of course, because the lack of diplomatic nuance harkens back to an anachronistic paradigm, President Trump’s rhetoric has effectively sparked robust demand for safe havens. One such expression could come in the form of PG stock. While its overall performance was disappointing last year, P&G generally offers stable returns, along with a solid 2.88% dividend yield.

For the upcoming Jan. 22 disclosure for the fiscal second quarter, Wall Street analysts will be looking for earnings per share of $1.86 on revenue of $22.29 billion. In the year-ago quarter, P&G posted EPS of $1.88 on revenue of $21.88 billion. These figures modestly beat expectations calling for EPS of $1.86 and a top-line print of $21.59 billion.

Overall, while analysts lean bullishly on PG stock, the assessment is quite mixed. Some experts don’t anticipate much movement in the security in either direction following the results, while others believe a decent print — stemming from demand for everyday goods following the holiday shopping surge — could see PG march higher.

Here’s the technical reality. With PG stock down 9% in the past 52 weeks, in addition to increased safe-haven demand, the chances of upside seem plausible. In addition, the options market could also be signaling optimism.

Laying Out the First-Order Battlefield for PG Stock

To get an idea of how much kinetic potential PG stock may generate, it’s useful to consider implied volatility (IV), which is a residual metric derived from actual order flows. As expected, IV for the Jan. 23 options chain is relatively elevated at 45.73%. By contrast, for the next monthly options chain expiring Feb. 20, IV sits at only 21.5%.

Using the Black-Scholes model­ — Wall Street’s standard mechanism for pricing options — the expected high-low spread for the Jan. 23 options chain is 3.06% relative to the current spot price of $147. Generally, though, I prefer analyzing a longer time period.

For the Feb. 20 options chain, the expected high-low spread stands at 4.66%, which translates to a lower price target of $139.67 and an upper target of $153.33. Now that we have a dispersion based on anticipated volatility, we need to clarify whether this forecasted distribution is optimal or not.

At first glance, these expected move calculators appear insightful, and they are to an extent. They provide the parameters of the battlefield. That said, it may not be the most efficient use of capital to chase after the underlying outcomes.

From a debit-side trader’s perspective, you are paying a premium for the right to speculate on events yet to materialize. So, if you have a wide dispersion, your costs will also be wide if you attempt to trade the entire distribution. However, if you have good reason to believe that certain outcomes will be more probable than others, you have an incentive to only focus on likely scenarios.

Stated differently, most options-related financial content leads up to Black-Scholes as the answer. As a matter of fact, Black-Scholes is the question. If you want the answer, you must turn to the Markov property.

Graduating to a Second-Order Analysis

In football, a 20-yard field goal attempt — especially in the professional iteration — is practically a guaranteed three points. However, this high success ratio could quickly fall down the order when other factors, such as cold weather, harsh winds and playoff pressure are thrown into the mix. At that point, nothing is guaranteed.

What is the point of mentioning this? As any sports fan inherently recognizes, context changes everything. Under the Markov property, the future (behavioral) state of a system depends only on the current state. Basically, if you want to know what may happen tomorrow in the market, you can’t just have a one-size-fits-all formula like Black-Scholes. Instead, you need to consider today’s market context.

Let’s look at PG stock. In the trailing 10 weeks, PG stock printed six up weeks, but with an overall downward slope. This unusual contrast — which I have abbreviated as the 6-4-D sequence — will likely spark a different forward outcome than had any other sequence flashed.

Using past analogs going back to January 2019, when the 6-4-D sequence flashes, the forward 10-week outcomes would typically range between $147 and $153 (assuming a spot price of $147, Tuesday’s close). Probability density would likely peak between $150 and $151.

Looking out five weeks ahead (which approximately coincides with the Feb. 20 options chain), forward outcomes would likely cluster in a slightly tighter range between $148 and $153, with probability density peaking at $151.

You can clearly see the beauty of the Markov property. With just Black-Scholes, we had a range for PG stock between about $140 and $153. That’s the equivalent of saying the stock could go up or it could go down — brilliant insight, right? With Markov, which is effectively an analysis of an analysis, we’re targeting a much tighter spectrum.

Trading Ideas to Consider

With the way that market makers are currently structuring risk, there are two trading ideas that potentially stand out. First, the 148/150 bull call spread expiring Feb. 20 appears enticing. This wager requires a net debit of $110 for the chance to earn a profit of $90 should PG stock rise through the second-leg strike ($150). Breakeven lands at $149.10, making this a contextually credible call spread.

However, the payout of just under 82% might not be to everyone’s liking. For an enhanced opportunity, bold contrarians may opt for the 149/155 bull call spread. This trade requires PG stock to rise through the $155 strike at expiration. If so, the maximum payout would clock in at 212.5%.

Of course, hitting such a lofty target over the next five weeks is awfully ambitious. What does add to the overall credibility is the breakeven price, which comes in at $150.92. Basically, this aligns with peak probability density under 6-4-D conditions.

With any luck, a stronger-than-expected earnings report could see PG stock reach for the higher prices of the forward distribution. Ultimately, it’s going to come down to personal risk tolerance.

The Strategy Behind the Dogs of the Dow

The Dogs of the Dow strategy is made up of two distinct parts. The first is to invest, and the second is to rebalance.

Part one: Invest equal amounts into the 10 highest-dividend-yielding stocks from the Dow Jones Industrial Average. Because the Dow Jones Industrial Average is widely regarded as a benchmark of the broader U.S. stock market, its component stocks represent the entire U.S. market. Furthermore, these are blue-chip stocks that are strong enough to withstand the test of time.

Part Two: Rebalance the portfolio every year into equal amounts of the 10 highest-yielding stocks in the Dow. The rationale for doing this every year goes back to research that indicates that, over the long term, the strategy generates higher returns then buying shares of an index fund tied to the DJIA, or even the S&P 500.

It’s a deceptively easy strategy, but it requires discipline. If this strategy appeals to you, here’s a cheat sheet to help you execute this strategy in 2026.

Dogs of the Dow: 2025 and 2026

For 2025, here’s how the Dogs of the Dow are doing with just days to go.

• Verizon (NYSE: VZ), which yields 6.85%, started the year at around $38. It’s now up to $40.
• Chevron (NYSE: CVX), which yields 4.54%, ran from about $142 to $150.50.
• Johnson & Johnson (NYSE: JNJ), which yields 2.5%, ran from $142 to $207.78.
• Amgen (NASDAQ: AMGN), which yields 3.02%, ran from about $258 to $334.
• Merck (NYSE: MRK), which yields 3.19%, traded between approximately $98 and $106.45.
• Coca-Cola (NYSE: KO), which yields 2.91%, jumped from $61 to $70.11 so far.
• IBM (NYSE: IBM), which yields 2.21%, ran from about $215 to a $304.56.
• Cisco (NASDAQ: CSCO), which yields 2.1%, ran from about $58 to $78.
• McDonald’s (NYSE: MCD), which yields 2.37%, ran from about $293 to $313.
• Procter & Gamble (NYSE: PG), which yields 2.93%, fell from about $264 to $144.50.

That’s not bad at all.

Plus, once you factor in the yields for each, the Dogs of the Dow outperformed the Dow Jones.

As for 2026, while the official list isn’t out just yet, here’s what’s likely to make the list.

• Verizon (VZ), which yields 6.84%
• Chevron (CVX), which yields 4.56%
• Merck (MRK), which yields 3.2%
• Procter & Gamble (PG), which yields 2.92%
• Amgen (AMGN), which yields 3.04%
• Coca-Cola (KO), which yields 2.92%
• Nike (NYSE: NKE), which yields 2.72%
• UnitedHealth (NYSE: UNH), which yields 2.68%
• Home Depot (NYSE: HD), which yields 2.64%
• Johnson & Johnson (JNJ), which yields 2.51%

A Strategy With a Proven Track Record

Historically, the Dogs of the Dow do very well for income-oriented investors.

• The 2024 Dogs of the Dow underperformed the major indices in 2024. However, with dividends, investors still did well for the year.
• The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones’ Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall.
• The 2022 Dogs of the Dow beat the major indices, even in a rough year.

In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The S&P 500 lost 19%.  The Dow Jones lost about 9%.

• In 2021, the Dogs of the Dow returned about 16.3%.
• In 2019, the Dogs were up 20%. 
• In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%. 
• In 2017, the dogs were up 19%.  In 2016, they were up 16%.

While 2020 wasn’t a great year for the Dogs, it wasn’t great for a lot of stocks for obvious reasons. However, most other years, the Dogs of the Dow have performed very well. 

Should You Buy the Dogs of the Dow in 2026?

The Dogs of the Dow remains one of the simplest income strategies available to retail investors, and its track record speaks for itself. While the strategy doesn’t outperform every year, the long-term results show consistent dividend income and competitive total returns, especially during volatile market cycles. With yields still attractive and several blue-chip names likely to appear on the 2026 list, the setup for the coming year looks compelling. As always, discipline and annual rebalancing are key. For patient investors who value simplicity and dependable dividends, the Dogs of the Dow remain worth serious consideration.

In fact, having traded the Dogs of the Dow since 2016, I can tell you it’s still a solid strategy with dividend payouts to boot.

For those of you who are new to the Dogs, it’s one of the easiest – and oftentimes most profitable strategies. You simply buy a basket of underperformers on the Dow that pay dividends, and sell by the end of the year. In most years, the Dogs do pretty well.

What makes the strategy attractive is that you’re buying the highest-yielding stocks on the Dow, which itself is made up of large, established, and financially stable companies. This selection process filters for reliability and lowers the risk of investing in a speculative venture. All you’re really doing is investing in temporarily beaten-down respected companies and collecting yield until the stock decides to rally back.

For those who are new to the Dogs of the Dow, it really is that easy.

A Proven Track Record

Let’s look at how the Dogs have done historically since 2016.

The 2024 Dogs of the Dow underperformed the major indices in 2024. However, with dividends, investors still did well for the year.

The 2023 Dogs of the Dow returned an average of 10.1%, which came in below the 14.4% return on the Dow Jones Industrials. Still, with the appreciation in most of the 2023 Dogs coupled with dividends, investors still did well overall. The 2022 Dogs of the Dow beat the major indices, even in a rough year.

In fact, while the Dogs of the Dow stocks fell 1.6% on the year, once you add in the dividend payouts, the Dogs returned 2% on the year. And while 2% may not sound like a big win, consider that, in 2022, one of the worst years on record since 2008, the NASDAQ lost 33%.  The S&P 500 lost 19%.  The Dow Jones lost about 9%.

In 2021, the Dogs of the Dow returned about 16.3%. While 2020 wasn’t a great year for the Dogs, most other years have done very well.  In 2019, the Dogs were up 20%.  In 2018, they were up about 1%, but still beat the Dow, which fell close to 6%.  In 2017, the dogs were up 19%.  In 2016, they were up 16%.

How Are the Dogs of the Dow Doing in 2025?

For 2025, here’s how the Dogs are doing.

• Verizon (VZ), which yields 6.68%, started the year at around $38. It’s. now up to $41.35.
• Chevron (CVX), which yields 4.51%, ran from about $142 to $151 so far.
• Johnson & Johnson (JNJ), which yields 2.57%, ran from $142 to $202.50.
• Amgen (AMGN), which yields 2.78%, ran from about $258 to $342.
• Merck (MRK), which yields 3.57%, slipped from about $98 to $95.
• Coca-Cola (KO), which yields 2.86%, jumped from $61 to $71.35.
• IBM (IBM), which yields 2.31%, ran from about $215 to a high of $291.
• Cisco (CSCO), which yields 2.09%, ran from about $58 to $78. 
• McDonald’s (MCD), which yields 2.44%, ran from about $293 to $304.
• Procter & Gamble (PG), which yields 2.87%, fell from about $264 to $147.

Eight out of 10 isn’t bad at all.

Conclusion

Not only do investors make a substantial amount of money year to date from the Dogs of the Dow stocks, but they also earn a good return on the dividends. Also, while the 2026 Dogs of the Dow list hasn’t been released yet, stay tuned. We’ll share that list with you once it’s officially out.