The S&P 500 (SNPINDEX: ^GSPC) is up 12% so far in 2026, but that doesn't mean investors have forgotten about the headwinds the stock market faces. Stubborn inflation, rising interest rates to combat it, and $40 trillion in debt are all challenges the U.S. economy is trying to navigate.

That's not saying that stocks in general can't keep climbing, but with the S&P 500 slightly down over the last month, the reality of those challenges may be sinking in. And the worry is always that if the S&P 500 rally derails, a bear market may loom, clawing back those gains as stock prices fall 20% from recent highs.

History, however, suggests that there's one habit successful investors can follow, even during a full-fledged bear market.

Image source: Getty Images.

The surprising truth about bear markets

Surprisingly enough, some of the best days to invest are when the markets are in a free-for-all. According to Hartford Funds, from 1996 through 2025, 48% of the best days to invest in the S&P 500 were during bear markets. The second-best time to invest was during the first two months of a bull market (28% of the best days to invest), while the third-best time to invest was during the rest of a bull market (24% of the best days to invest).

Moreover, according to the data, missing the best days for the S&P 500 can actually cost you money. For example, a hypothetical $10,000 investment in the S&P 500 in 1996 would have been worth $192,167 by the end of 2025. But for anyone who had sold and missed just the 10 best days of the market during all that time, that investment return drops by 56%, turning into $85,490. It continues to get worse from there: Missing the 20 best days yields just $49,551, and missing the 30 best days yields only $31,123.

The investable lesson

The most important habit for successful investing is that, no matter how tempting it may be to sell a stock during a bear market, it's almost always better to hold the shares. But another lesson is that more aggressive investors may want to consider buying additional shares of a company during this time. Bear markets won't last forever; the average length is 9.6 months. In comparison, bull markets tend to last 2.7 years. Also, while stocks lose an average of 35% during a bear market, they also gain an average of 112% during a bull market.

While seeing a stock lose 35% of its value in less than a year can feel gut-wrenching, having a portfolio of high-conviction positions already established can help offset knee-jerk reactions. Not only will an investor want to hold on to shares of those companies because they already believe in the wealth they could build over the long term, but they'd also want to buy more shares to take advantage of price drops.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The Federal Reserve is no longer projected to hike interest rates at the next FOMC meeting later this month, according to forecasts tracked by Polymarket. This comes after quotes from Fed representatives have revealed that there is currently no rush to raise rates again. Vice Chair Philip Jefferson said on Thursday that while he supported the US central bank’s interest rate increase last month, he does not see any urgency to make another move.

“Any future adjustments in policy should be determined by carefully examining trends in the data, the evolving outlook, and the balance of risks,” Jefferson said in the text of remarks to be delivered before the University of Virginia’s Darden School of Business. The Federal Reserve last raised its benchmark federal funds rate by 25 basis points to a target range of 3.75%–4.00% at its September 16 meeting.

There were concerns about another interest rate hike raised this week as Mortgage rates continued to rise. Indeed, mortgage rates have reached their highest levels since late 2023, as the global bond selloff wore on. The average 30-year fixed-rate mortgage was 7.6% as of Wednesday, according to Mortgage News Daily, up around 15 basis points from a week earlier. Rates haven’t been this high since November 2023. Further, rates have risen by 70 basis points in the last month alone.

Also Read: Congress Considers Expanding Crypto, Stablecoin Rules for Banks

Despite pressure from the Trump administration to continue lowering interest rates, the Fed under Kevin Warsh has remained stalled on making drastic changes to rates, and its plan remains hard to comprehend. Last month’s rate hike was the first of its kind in three years.

Vanguard Total World Stock ETF (NYSEMKT:VT) provides investors with exposure to both U.S. and international markets, whereas Schwab International Equity ETF (NYSEMKT:SCHF) serves as a low-cost specialist for developed economies outside the United States.

While both funds offer global reach, the Vanguard Total World Stock ETF follows the FTSE Global All Cap Index to capture the entire investable world. In contrast, the Schwab International Equity ETF tracks the FTSE Developed ex US Index, making it a dedicated tool for those wanting to isolate international developed markets at a rock-bottom price point.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Schwab International Equity ETF is a more affordable option for investors, carrying a low 0.03% expense ratio compared to 0.06% for the Vanguard Total World Stock ETF. This 0.03-percentage-point difference can affect long-term compounding over decades. Additionally, the Schwab fund offers a significantly higher payout, with a 3% yield versus 1.5% for the Vanguard fund.

Performance & risk comparison

What's inside

The Vanguard Total World Stock ETF casts a wide net, holding more than 10,000 securities across the globe. Its portfolio leans heavily into technology at 30%, followed by financial services at 16% and industrials at 11%. Its largest positions include Nvidia at 4.3%, Apple at 3.8%, and Microsoft at 3.1%. The fund was launched in 2008. Vanguard Total World Stock ETF has paid $2.41 per share over the trailing 12 months, which on its recent ~$158.81 share price works out to a 1.5% yield.

The Schwab International Equity ETF focuses more narrowly on developed markets outside the U.S., with a portfolio of 1,442 holdings. Its sector allocation is led by financial services at 25%, technology at 17.7%, and industrials at 17.6%. Its largest positions include Samsung Electronics at 3.2%, SK Hynix at 2.5%, and ASML Holding at 2.4%. The fund was launched in 2009. Schwab International Equity ETF has paid $0.84 per share over the trailing 12 months, which on its recent ~$27.72 share price works out to a 3% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

When you're looking to diversify your stock portfolio, leaning toward international funds is a good idea. Vanguard's Total World Stock ETF is often suggested as a good starting point, as it covers both domestic and foreign stocks in both developed and emerging markets. It's relatively inexpensive to own, and while its exposure to emerging markets comes with some risk, its breadth across 10,000 holdings gives it a good deal of stability. For long-term investors, it's an easy set-it-and-forget-it holding. But investors who are truly seeking diversification may not be satisfied with VT's approach. Indeed, its top three names are familiar U.S. tech giants, and while it offers a slightly higher dividend yield, it's underperformed the S&P 500 index over the last five years.

SCHF leans further into the international diversification theme, providing access to large- and mid-cap stocks from developed countries outside the U.S., including South Korea and Canada. Its market cap and geographic limits protect investors from the most extreme risk, but the fund has demonstrated a sharper five-year maximum drawdown. Like VT, it’s also underperformed the S&P 500 over the last five years. That said, it's also cheaper to own and generates more dividend income than VT. And it gives you exposure to stocks that may not already be in your portfolio.

Sarah Sidlow has positions in Apple, Microsoft, Nvidia, and Vanguard International Equity Index Funds - Vanguard Total World Stock ETF. The Motley Fool has positions in and recommends ASML, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

The incident may undermine investor confidence, affecting OpenAI's valuation and highlighting the need for robust internal security measures.

The post OpenAI fires three safety researchers over alleged leak to outside group appeared first on Crypto Briefing.

The market cap reflects the total dollar value of a publicly traded company's outstanding shares. If a company has 1 billion shares at $8 per share, it has an $8 billion market cap.

I look at this number before buying any stock because it highlights an investment's growth potential. While market cap isn't the only thing to consider, it's a critical part of my stock analyses. Here's why I put so much value into this number.

Image source: Getty Images.

The different types of market caps

A $5 trillion company is a bit different from a $500 million company, and that's why investors use multiple categories to describe stocks by market cap. Here's the brief summary:

• Micro-cap stocks: Market cap under $300 million
• Small-cap stocks: Market cap between $300 million and $2 billion
• Mid-cap stocks: Market cap between $2 billion and $10 billion
• Large-cap stocks: Market cap between $10 billion and $200 billion
• Mega-cap stocks: Market cap above $200 billion

Smaller companies are riskier but have a higher potential upside, while large-cap and mega-cap stocks are treated as more mature companies. They have a lower potential upside, but they also have less risk.

Large-cap and mega-cap stocks can still outperform smaller companies. Mega-cap stock Nvidia (NASDAQ: NVDA) is up by more than 20% year to date, easily outperforming the S&P 500 and most small companies.

However, I usually stay away from large-cap and mega-cap stocks. Some micro-cap stocks are in my portfolio, but my sweet spot is small-cap and mid-cap stocks.

Finding the next Nvidia requires understanding market caps

Many investors wish they could find the next Nvidia. Some people actively search for those types of growth stocks, while others read articles that explain why a certain stock can become the next Nvidia.

In most cases, this means looking for a stock that can deliver a 10x return, and for that, you have to focus on smaller companies.

Micron (NASDAQ: MU) has become a large player in the AI trade as its memory chips continue to fly off the shelves. However, Micron also has a $1.2 trillion market cap. The company would have to reach a $12 trillion market cap, more than twice Nvidia's current valuation, to produce a 10x return.

It's much easier for a $2 billion company to become a $20 billion company than it is for a $1.2 trillion company to soon command a $12 trillion valuation. That's why my memory plays are Penguin Solutions (NASDAQ: PENG) and Netlist (OTC: NLST) instead of Micron. Both of these companies have market caps under $5 billion and have more than doubled their memory revenue year over year.

A low market cap does not guarantee better returns

I'm not just buying more shares of Penguin Solutions and Netlist because I like their market caps. I primarily build these positions because of good fundamentals. They are exposed to the growing memory chip industry and have attractive multiyear tailwinds.

A market cap under $10 billion serves as an invitation for me to do more digging. Then I review earnings reports and presentations to assess the company's current direction.

Most stocks underperform the broader market, and that's especially true for smaller companies. The Russell 2000 Index, the small-cap benchmark, is up by less than 30% over the past five years. The S&P 500 has gained more than 70% over that same stretch.

Ironically, the Russell 2000 Index is a great place to find smaller companies that can crush the giants. However, this benchmark is filled with too many small-cap companies, which minimizes the impact of 10x performers. For instance, the benchmark's largest holding makes up less than 0.5% of the entire fund.

Companies with smaller market caps are more volatile and can result in significant capital losses for some positions. However, a single small-cap stock that can 10x will undo the losses of smaller positions. Prioritizing companies with smaller market caps increases the likelihood of compelling returns, but it's an opportunity only suitable for investors who can stay on top of their investments and read the news every day to learn new things.

Marc Guberti has positions in Netlist and Penguin Solutions. The Motley Fool has positions in and recommends Micron Technology, Nvidia, and Penguin Solutions. The Motley Fool has a disclosure policy.

The iShares U.S. Regional Banks ETF (NYSEMKT:IAT) and iShares MSCI Europe Financials ETF (NASDAQ:EUFN) provide targeted banking exposure, with the European fund offering broader diversification and higher income potential.

Investors looking at the financial sector often choose between domestic focus and international diversification. Comparing a regional banking fund to a broad European financial fund highlights differences in concentration, dividend potential, and risk profiles, ranging from localized U.S. credit cycles to the systemic regulatory environments of the Eurozone.

This comparison examines how investors might balance the concentrated exposure of a regional portfolio against the broader reach of developed European institutions.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The iShares U.S. Regional Banks ETF maintains a cost advantage with its 0.37% expense ratio, making it a relatively efficient choice for domestic bank exposure. On the income side, the iShares MSCI Europe Financials ETF offers a more substantial yield, as its 4.1% payout provides a notable margin over the 2.9% distribution from the American fund. This yield gap of 1.22 ppt may be a deciding factor for income-focused investors.

Furthermore, with $4.0 billion in assets under management (AUM), the European fund is considerably larger than the domestic regional bank fund, which manages $614.1 million.

Performance & risk comparison

The iShares MSCI Europe Financials ETF aims to replicate a benchmark of companies within the financial services industry in developed European markets. Its portfolio includes 84 positions, primarily concentrated in financial services at 98%, with minor 1% allocations to technology and industrials. Its largest positions include HSBC Holdings at 9.66%, Banco Santander at 5.76%, and Allianz at 5.13%. This fund was launched in 2010, and has paid $1.65 per share over the trailing 12 months, which on its recent ~$40.85 share price works out to a 4.1% yield.

The iShares U.S. Regional Banks ETF seeks to mirror the performance of an index consisting of domestic stocks specifically within the regional banking industry. It is significantly more concentrated than its European peer, holding just 30 positions with 100% exposure to financial services. Top holdings include Us Bancorp at 15.14%, PNC Financial Services Group at 14.82%, and Truist Financial at 9.59%. This fund was launched in 2006, and has paid $1.64 per share over the trailing 12 months, which on its recent ~$57.97 share price works out to a 2.9% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

The iShares MSCI Europe Financials ETF (EUFN) and iShares U.S. Regional Banks ETF (IAT) gives you very different types of exposure to the financial sector. Choosing between them comes down to whether you want to invest in the European financial market or "main street USA." That said, several additional factors may sway the decision to one fund, or you could invest in both to gain global exposure as the holdings do not overlap.

IAT's regional banks focus means you're investing in local economies within the U.S. It delivers a solid dividend yield, and smaller banks have the potential to outperform larger companies. However, those benefits come with far greater volatility, as demonstrated by the ETF's larger max drawdown. Also, its AUM is much smaller, so the liquidity isn't as great as the European-targeted fund.

EUFN is ideal for conservative investors, given its lower volatility. It's an all-around excellent ETF compared to IAT, delivering a better total return, higher dividend yield, and a greater AUM. These pros are offset by a larger expense ratio, as well as currency risks that can impact your return.

HSBC Holdings is an advertising partner of Motley Fool Money. Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial and U.S. Bancorp. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.

The State Street SPDR S&P Regional Banking ETF (NYSEMKT:KRE) and Invesco KBW Bank ETF (NASDAQ:KBWB) offer distinct paths into the banking sector, with one focusing on smaller regional players and the other targeting large national institutions.

Both funds provide exposure to U.S. financial institutions, but their portfolio construction leads to different risk-reward profiles. While the State Street fund casts a wide net across 167 smaller lenders to capture the regional banking industry, the Invesco fund provides highly concentrated exposure to 26 of the heavyweights that dominate the American financial landscape.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Both funds have an identical expense ratio of 0.35%, so investors may choose between them based on strategy rather than management costs. The Invesco fund offers a slightly lower dividend yield of 2.1%, compared with 2.3% for the State Street fund, reflecting a minor difference in annual income potential.

Performance & risk comparison

What's inside

The Invesco KBW Bank ETF concentrates on 26 holdings within the financial services sector. Its largest positions include JPMorgan Chase & Co (NYSE:JPM) at 8.10%, Wells Fargo & Co (NYSE:WFC) at 8.01%, and Morgan Stanley (NYSE:MS) at 7.77%. The fund was launched in 2011. Invesco KBW Bank ETF has paid $1.87 per share over the trailing 12 months, which, on its recent ~$89 share price, works out to a 2.1% yield.

The State Street SPDR S&P Regional Banking ETF tracks 167 holdings, focusing entirely on financial services companies. Its top holdings include United Bankshares (NASDAQ:UBSI) at 1.15%, Old National Bancorp (NASDAQ:ONB) at 1.14%, and East West Bancorp (NASDAQ:EWBC) at 1.14%. It was launched in 2006. State Street SPDR S&P Regional Banking ETF has paid $1.61 per share over the trailing 12 months, which, on its recent ~$71 share price, works out to a 2.3% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

To compare the State Street SPDR S&P Regional Banking ETF (KRE) and Invesco KBW Bank ETF (KBWB), investors should consider several key details. Let's see what they tell us about each fund.

First, we should discuss how the strategies for these funds differ. Crucially, KRE is a fund that focuses on regional banks. These are smaller banking institutions that serve local communities up to entire regions. KBWB, conversely, holds national money-center bank stocks, with a few large regional banks thrown in.

Two other important factors are historical performance and income potential. As for performance, KBWB wins the head-to-head matchup. Since 2016, KBWB has generated a total return of 210%, equating to a compound annual growth rate (CAGR) of 12%. Meanwhile, KRE has delivered a total return of 111%, with a 7.8% CAGR. Both funds have underperformed the S&P 500 over this same period. Turning to income potential, KRE boasts a dividend yield of 2.32%, while KBWB offers 2.14%, giving KRE a slight edge among income-focused investors.

One final factor to weigh is cost. But in this regard, there is no difference. Both funds have an expense ratio of 0.35%, which ranks somewhat near the average for ETFs. For context, a person who invests $10,000 in either fund should expect to pay $35 per year in fees.

To conclude, although KRE and KBWB are both financial ETFs, they target specific sub-sectors of the financial landscape. KRE may be favored by investors seeking small-cap exposure or those looking to derive more income from their investments. KBWB is an option for investors seeking concentrated exposure to major U.S. banks.

Wells Fargo is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Jake Lerch has positions in SPDR Series Trust - State Street SPDR S&P Regional Banking ETF. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

The primary distinction between the Vanguard Total World Stock ETF (NYSEMKT:VT) and State Street SPDR Portfolio Developed World ex-US ETF (NYSEMKT:SPDW) is their geographic scope and inclusion of domestic equities.

These funds serve different roles in a portfolio. While one aims to capture the entire global stock market in a single fund, the other acts as a specialized tool for investors who already have U.S. exposure and want to add developed foreign markets efficiently.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The State Street fund is the more affordable option with its 0.03% expense ratio. It also offers a higher payout, with a 3% yield that is double the 1.5% yield offered by the Vanguard fund.

Performance & risk comparison

What's inside

The Vanguard Total World Stock ETF provides massive diversification with 9,773 holdings. Its sector exposure is led by technology at 30%, financial services at 16%, and industrials at 11%. Its largest positions include Nvidia at 4.32%, Apple at 3.84%, and Microsoft at 3.16%. The fund was launched in 2008, and has paid $2.41 per share over the trailing 12 months, which on its recent ~$158.81 share price works out to a 1.5% yield.

The State Street SPDR Portfolio Developed World ex-US ETF holds 2,436 stocks, focusing on financial services at 24%, industrials at 18%, and technology at 15%. Its largest positions include Samsung Electronics at 2.64%, SK Hynix at 2.23%, and ASML Holding at 2.02%. The fund was launched in 2007, and has paid $1.52 per share over the trailing 12 months, which on its recent ~$50.69 share price works out to a 3% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

For an investor with a U.S.-centric investment portfolio, gaining exposure to foreign markets is a key means of diversification. The Vanguard Total World Stock ETF (VT) and State Street SPDR Portfolio Developed World ex-US ETF (SPDW) provide this. Choosing between them comes down to how they complement your existing equity ownership.

Vanguard's VT delivers what its name indicates, a fund containing stocks from around the world, including the U.S. This is a great ETF for those new to investing, as it captures key global companies in one spot. It can also be good for more seasoned investors as it provides exposure to prominent businesses driving the artificial intelligence boom.

However, if you already own many U.S. stocks, you may have too much overlap with VT. The fund's holdings are heavily focused in North America, which represents a hefty 65% of the ETF. So if you possess shares in Nvidia and other top VT holdings, SPDW may be the better fit.

SPDW provides robust international stock exposure, while also offering a superior dividend yield and lower expense ratio. Its top holdings include AI giants such as ASML and SK Hynix, so you benefit from the AI sector's rapid growth as well. Its one downside is that it does not cover emerging markets, which VT does include.

Robert Izquierdo has positions in ASML, Apple, Microsoft, and Nvidia. The Motley Fool has positions in and recommends ASML, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

As of 11:31 a.m. ET, the Nasdaq Composite (NASDAQINDEX:^IXIC) was down 0.22% to 26,801, the S&P 500 (SNPINDEX:^GSPC) was trading lower by 0.26% to 7,632, and the Dow Jones Industrial Average (DJINDICES:^DJI) dropped 0.56% to 50,623 as surging bond yields pressure blue chip components.

Gold was up 0.17% to $4,193.70, while the 10-Year Treasury yield rose 0.03% to 5.29% during a session where industrials are leading the market. Basic materials stocks are the primary laggard, with consumer defensive names also showing resilience.

Today's biggest moves

Accenture (NYSE:ACN) shares jumped after the company reported quarterly results that beat expectations alongside an upbeat fiscal 2027 outlook, while McKesson (NYSE:MCK) is rallying despite broader volatility. On the downside, Corteva (NYSE:CTVA) is among the session's notable decliners and General Mills (NYSE:GIS) hit a 52-week low as rising interest rates weigh on the consumer sector.

What this means for investors

In a sign that investor expectations are higher than ever for tech firms, Micron Technology's (NASDAQ:MU) stock sank even after the company reported sales nearly quadrupled year over year and beat the analyst earnings consensus. It also issued strong guidance, but much of that news was already seemingly priced in.

The market was also under pressure as Treasury yields reached their highest level in over 20 years. Those rising rates will hit growth companies harder as they continue to borrow to invest in artificial intelligence (AI) equipment.

High Treasury yields also compete with dividend-paying stocks, helping to drive that segment of the market lower. The market may also be looking ahead to Friday's monthly jobs report, which could help determine the future direction of interest rates.

Howard Smith has positions in Alphabet. The Motley Fool has positions in and recommends Accenture Plc, Alphabet, Chevron, and Micron Technology. The Motley Fool recommends McKesson and recommends the following options: long January 2028 $260 calls on Accenture Plc and short January 2028 $280 calls on Accenture Plc. The Motley Fool has a disclosure policy.

If someone came to you and said they had $1,000 to invest and wanted your help in deciding where to put it, what would you tell them?

Based on recent market returns, your inclination might be to say a tech exchange-traded fund (ETF), such as the Vanguard Information Technology ETF (NYSEMKT: VGT). Since they're just starting out, you might suggest more of a foundational piece, such as the Vanguard S&P 500 ETF (NYSEMKT: VOO).

I think the latter choice is certainly defensible. You want to start your portfolio with something that's broadly diversified, ultra-low cost, and can be held for decades or more. The tech ETF probably isn't a good choice for a starter portfolio (at least as the first fund to own). It's far too focused on a riskier single sector to be the point you want to build from.

But for someone investing for the first time, I think dividend stocks are the best place to start. This might seem like an overly conservative choice in a market that has been rewarding just the opposite. But for someone who might just be learning about how long-term wealth is created, dividend stocks and ETFs will do a better job of teaching them how to invest the right way.

Image source: Getty Images.

What is a dividend?

A dividend is simply a portion of a company's earnings that is paid out to shareholders. Most companies pay them out on a quarterly basis, but a small percentage pay them monthly or even annually.

Companies that issue dividends are generally considered to be higher quality, more mature, and more durable. This is because they often don't start paying dividends until they're well established and generate sufficient cash flows and profits to support them.

Some of the best dividend stocks are those from companies that continue to raise their payouts annually, often called dividend growth stocks. This commitment to rewarding shareholders regularly makes the stock attractive to income seekers and helps reinforce the idea that their business is on firm financial footing.

But none of this is guaranteed. Companies can raise or cut their dividends based on their financial condition and economic environment. But most companies that begin issuing dividends prefer to keep those payments steady or growing if at all possible.

One of the advantages of dividend stocks is that they give you two potential sources of return: share price growth and dividend income. Many of the big tech and artificial intelligence (AI) companies don't pay dividends because they're using all of their cash to grow their businesses. Their total return will be based solely on share price changes. Dividend income can help support total returns during times when the share price is falling.

History makes a strong case for dividend investing

You may not guess it based on recent returns, but dividend stocks have an established history of outperforming other types of stocks over the long term. And this is where I think the risk/reward trade-off becomes such an important part of building your portfolio. A Ned Davis Research study looking at stock performance since 1973 shows that stronger dividend payment and growth policies have historically resulted in better total returns with lower risk.

Data source: Ned Davis Research.

The logic is pretty straightforward. Dividend growers should, in theory, be generating more cash flow and more profits in order to support higher dividend payments. Companies with steady dividends may demonstrate consistent corporate health, but perhaps without the stronger growth. Dividend cutters are likely in some financial distress and need to hang on to whatever cash they can to support the business.

Another Hartford Funds study showed that over the past 85 years, dividend income contributes roughly 1/3 of a stock's total return. Combine these factors together -- better historical returns, lower risk, high-quality balance sheets -- and I think you've got one of the best long-term investing strategies for those folks starting out for the first time. Or anybody, really.

Growth and tech stocks can provide spectacular short-term returns, as we've seen in recent years. But they can also experience greater downside risk and spectacular busts. Just look at what happened when the tech bubble burst in the early 2000s, and the Nasdaq-100 lost over 80% of its value. Dividend stock investing offers more stability and helps limit some of the more excessive risks.

Here's how I'd start dividend investing today

Researching individual dividend stocks can be time-consuming and complex. So I'd start with a broadly diversified dividend ETF that offers a basket of high-quality dividend stocks in one place.

The WisdomTree U.S. Total Dividend ETF (NYSEMKT: DTD) gives you access to essentially the entire dividend stock universe. The Vanguard Dividend Appreciation ETF (NYSEMKT: VIG) and the ProShares S&P 500 Dividend Aristocrats ETF (NYSEMKT: NOBL) invest in long-term dividend growth stocks. The Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD) considers dividend growth history, balance sheet quality, and yield in its selection process.

Dividend investing doesn't necessarily need to account for your entire portfolio. Eventually, diversifying into tech or international stocks can provide balance. But as a foundation for a beginner investment portfolio, I think dividend stocks are a great start.

David Dierking has positions in Schwab U.S. Dividend Equity ETF, Vanguard Dividend Appreciation ETF, and Vanguard Information Technology ETF. The Motley Fool has positions in and recommends ProShares S&P 500 Dividend Aristocrats ETF, Vanguard Dividend Appreciation ETF, and Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.

While the State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE) offers broad energy exposure with a significantly lower expense ratio, the Alerian MLP ETF (NYSEMKT:AMLP) provides targeted midstream exposure and a higher distribution yield.

Investors looking for energy exposure must choose between broad-based equity funds and specialized infrastructure vehicles. This comparison evaluates the State Street Energy Select Sector SPDR ETF, which tracks the S&P 500 energy sector, against the Alerian MLP ETF, which focuses on energy infrastructure and transportation companies.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The State Street Energy Select Sector SPDR ETF is notably more affordable for investors, with an expense ratio that is 0.93 percentage points lower than the Alerian MLP ETF. However, the Alerian fund provides a significantly higher payout for those focused on current income.

Performance & risk comparison

What's inside

The State Street Energy Select Sector SPDR ETF is designed to mirror the return of the Energy Select Sector Index, providing exposure to oil, natural gas, and consumable fuels. Its portfolio comprises 21 holdings, representing the energy constituents of the S&P 500. Its largest positions include ExxonMobil Holdings Corp (NYSE:XOM) at 23.80%, Chevron Corp (NYSE:CVX) at 18.09%, and ConocoPhillips (NYSE:COP) at 6.72%. The fund was launched in 1998. State Street Energy Select Sector SPDR ETF has paid $1.52 per share over the trailing 12 months, which, on its recent ~$62.10 share price, works out to a 2.5% yield.

The Alerian MLP ETF tracks an index of energy infrastructure master limited partnerships that derive most of their cash flow from transporting and processing energy commodities. This fund holds 14 securities and is considered non-diversified due to its narrow focus on midstream assets. Its top holdings include Sunoco LP (NYSE:SUN) at 12.46%, Mplx Lp (NYSE:MPLX) at 12.12%, and Plains All American Pipeline LP (NASDAQ:PAA) at 12.08%. The fund was launched in 2010. Alerian MLP ETF has paid $4.07 per share over the trailing 12 months, which, on its recent ~$52.93 share price, works out to a 7.8% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

To compare the State Street Energy Select Sector SPDR ETF (XLE) and the Alerian MLP ETF (AMLP), investors should consider several key details. Let's see what they tell us about each fund.

To begin, we should discuss the greatest contrast between these two funds: strategy. XLE focuses on traditional energy stocks. Its largest holdings are oil and gas majors like ExxonMobil, Chevron, and ConocoPhillips. AMLP, on the other hand, focuses on master limited partnership stocks. These are partnerships that tend to be midstream oil and gas companies. MLPs have a special tax status and treatment that differ from traditional stocks.

Two other important factors are historical performance and income potential. As for performance, XLE has an edge. Since 2016, the fund has generated a total return of 162%, with a compound annual growth rate (CAGR) of 10.1%. AMLP, meanwhile, has delivered an 88% total return, with a 6.5% CAGR. Both funds have underperformed the S&P 500 over this period. Turning to income potential, AMLP has a significant advantage. AMLP boasts a stout dividend yield of 7.85%, while XLE's dividend yield is 2.48%.

One final factor to weigh is cost. On this measure, XLE is the clear winner. XLE's expense ratio is only 0.08%. AMLP, by contrast, has an expense ratio of 1.01%. That means an investor who puts $10,000 into each fund will pay $8 per year in fees for their XLE shares but $101 per year in fees for their AMLP shares. Over time, those fees can really add up.

To conclude, although XLE and AMLP are both energy ETFs, they differ in many ways. XLE is the clear choice for investors seeking simple energy exposure, thanks to its low fees, exposure to major oil and gas stocks, and its moderate dividend yield. AMLP is for investors seeking exposure to a basket of MLPs. It offers exception income potential through its 7.85% dividend yield, but its high fees make it a poor choice for cost-conscious investors.

Jake Lerch has positions in ExxonMobil. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends ConocoPhillips. The Motley Fool has a disclosure policy.

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Key Operational Milestones & Context

According to primary regulatory and corporate filings verified on SEPTEMBER 30, 2026, this development introduces crucial infrastructure enhancements. Industry leaders note that maintaining robust compliance, security, and market liquidity remains essential as digital asset services integrate into broader institutional frameworks.

The transition reflects a strategic pivot toward scalable, transparent operations. Analysts emphasize that ongoing technological upgrades will play a central role in sustaining user confidence and market stability over the coming quarter.

Market Outlook and Industry Impact

As institutional participation accelerates across global markets, this landmark event sets a notable precedent. Traders and investors are closely evaluating liquidity signals and collateral flows following the announcement.

For complete details and primary verification, the official release is accessible via the primary source link: Ethereum ETFs Break 7-Day Inflow Streak While Spot Bitcoin Funds Retain Demand Official Disclosure.

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