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Wall Street has received good news this month through a Fed rate cut. The Fed enacted a 25-bp rate cut, but the move was insufficient to keep the broader market rallying. The reason behind this was hawkish Fed cues. The Fed now projects just two rate cuts in 2025, down from earlier expectations of four, reinforcing a “higher for longer” policy approach that could weigh on the year’s final trading days.
Overall, the Fed enacted three rate cuts since September 2024. But that couldn’t keep the U.S. treasury yields from soaring. The benchmark U.S. treasury yields were 4.59% on Dec. 23, 2024, up from Dec. 2, 2024. The yield was 3.95% at the start of the year.
Trump’s victory in the U.S. Presidential election in November, and the subsequent stock market rally on hopes of fiscal reflation boosted risk-on trade sentiments and the long-term treasury yields. If this was not enough, Trump’s policies are deemed to raise inflation, which may deter the Fed to cut rates frequently next year.
High-dividend stocks and exchange-traded funds (ETFs), as a result, won in the past six months. These securities provide investors with avenues to make up for capital losses if that happens at all. Against this backdrop, below we highlight a few of the dividend ETFs that currently yield more than 20%.
High Dividend ETFs in Focus
Kurv Yield Premium Strategy Tesla ETF TSLP – Up 72.0% over the past six months; Yield: 21.08% annually
The Tesla (TSLA) stock has risen about 135% over the past six months. Tesla shares recorded a rocket rally since President-elect Donald Trump's victory. CEO Elon Musk's perceived influence on the incoming administration has bolstered investor confidence in Tesla's future (read: Tesla Stock Hits All-Time High: ETFs to Ride the Momentum).
YieldMax MSTR Option Income Strategy ETF MSTY – Up 67.0% over the past six months; Yield: 73.21% annually
MicroStrategy (MSTR), the world’s largest Bitcoin hoarder, joined the Nasdaq 100 index on Dec. 23. The move will offer the cryptocurrency more exposure in the tech-heavy market. The stock is often viewed as a Bitcoin proxy. The MSTR stock has added about 142% over the past six months on a superb Bitcoin rally (read: Will MicroStrategy ETFs Get a Boost from the Nasdaq-100 Joining?).
YieldMax PYPL Option Income Strategy ETF PYPL – Up 40.9% over the past six months; Yield: 46.15% annually
The PayPal (PYPL) stock has gained 46% over the past six months. With Elon Musk's appointment to lead the new advisory Department of Government Efficiency (DOGE) and David Sacks' role as cryptocurrency and artificial intelligence (AI) czar in the incoming Trump administration, certain members of PayPal have secured substantial power in the new administration. They will try to invoke fewer regulations for tech, more pro-cryptocurrency policies, and a less aggressive antitrust stance.