Iron-clad Income? Roundhill Launches Recession-Proof Dividend Fund

Liam Gibson

Man invested in stock

Dividend investors know that when it comes to distribution, it's not only size that counts but also consistency. The biggest threat to regular payouts? Recessions. Dividend growth fell dramatically following the dot-com bubble and the 2008 financial crisis, and with jitters persisting about the economy in 2024, resilience may have a premium again.

Those seeking an ever-flowing income stream from the most secure dividends on the market have a new purpose-built exchange-traded fund (ETF) to consider. 

On November 2nd, Roundhill Investments launched The Roundhill S&P Dividend Monarchs ETF on the New York Stock Exchange, Arca, under the ticker “KNGS.” This offers investors a one-stop shop to buy the so-called “Recession Kings” of the market – those firms that, through thick and thin, just keep on paying out more and more profits to shareholders. To make the cut, these legacy companies need to have consistently increased their dividends for at least five decades. They currently yield 3.51 percent.  

KNGS will seek to deliver the performance of the S&P Dividend Monarchs Index, which houses famous consumer brands like Colgate, Target, Pepsi, and Procter & Gamble.

“Considering there are not many companies that have been public since 1973, it's remarkable that these 30+ names have been in a position to consistently raise their dividends over the last 50 years,” says Roundhill's Dave Mazza of the fund. This includes “through times of war, bursting of multiple financial bubbles, and even a pandemic.”

Even when the world isn't melting down, dividend-heavy hitters can come through. Top-rated dividend stocks from the Dow Jones Industrial Average easily outperformed the S&P 500 last year. 

Roundhill's new offer comes as worries of a recession loom large over the market. 

Recession now tops inflation as the number one concern for retail traders, per a recent Retail Investor Beat (RIB) survey from trading platform eToro that canvassed opinions from 10,000 retail investors across 13 countries. Yet a recession is not the only major trending risk. 

It's the Politics, Stupid

 It's not only the economy that keeps execs at the edge of their boardroom seats. 

CEOs now rank geopolitics and political uncertainty as the paramount risks to growth over the coming three years, according to a recent KPMG survey.

Armed conflict is breaking out in multiple regions, further eroding the liberal world order. The recent hostilities in Israel and Palestine are once again threatening to engulf the Middle East in turmoil, a critical region for U.S. national security interests. While there is still no end in sight to the war between Russia and Ukraine, the persistent risk of a Chinese invasion of Taiwan lingers, threatening to bring the world's two largest economies into conflict.  

Domestically, the 2024 Presidential elections could pose another test for markets. The election could potentially be more divisive than the last, especially with repeat candidates. Currently, nearly three-quarters of voters worry President Joe Biden's age makes him unfit to serve four more years. Meanwhile, two-thirds are concerned about the multiple trials faced by former president Donald Trump, who is leading the polls among Republicans as their preferred candidate. 

These “recession king” stocks have stayed strong through disasters for decades, yet past yield performance cannot guarantee future payouts.

KNGS carries an expense ratio of 0.35%

Related: Investing in Dividend ETFs: The Top 6 Picks for Consistent Returns

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