Dividend stocks are having an excellent October as the tech sector struggles, according to MarketWatch. Exchange-traded funds focused on dividend stocks are seeing a powerful rally this month, adding to already huge gains in 2026.
Dividend stocks (Credits: MarketWatch)
The report, published October 26, highlights a sharp rotation in the market. While technology stocks have come under pressure, income-focused funds have continued to climb, extending a strong year for dividend payers.
Dividend Stocks October Rally Explained
According to MarketWatch data cited in the report, the iShares Core High Dividend ETF ended Monday nearly flat at $30.41, continuing to trade above its 50-day moving average of $29.19. Its top five holdings as of Friday were energy producers ExxonMobil and Chevron, healthcare company AbbVie, consumer-staples giant Procter & Gamble, and Verizon Communications.
The iShares fund has seen a big total return this year of 28.2% through Monday, a figure that includes both dividends paid and price appreciation, according to FactSet data in the report.
Other dividend funds have also put in a strong October showing. Shares of the Schwab U.S. Dividend Equity ETF (SCHD) have risen 8.5%, bringing its total 2026 gain to almost 32% through Monday. By comparison, the report notes, the S&P 500 has climbed just 12.1% so far this year.
Why Dividend Stocks Are Rallying as Tech Struggles
MarketWatch points to bond yields as part of the backdrop. A recent surge in bond yields had weighed on most corners of the market outside the tech space, but with yields looking like they have peaked for now, the report says investors have renewed interest in dividend-paying stocks.
The yield on the 10-year Treasury note settled Monday at 4.987%, after falling for three straight weeks, according to Dow Jones Market Data cited in the report. When bonds sell off, their yields climb, and when yields ease, income stocks can look more attractive by comparison.
The popularity of dividend stocks also comes at a time when the dividend yield of the broader S&P 500 has shrunk substantially. The report notes the index has increasingly become dominated by a handful of megacap growth stocks that do not offer generous dividends.
The S&P 500, whose largest sector by far is tech, had a forward dividend yield of 1.38% as recently as Friday, according to Dow Jones Market Data. That was only slightly above the 2026 low of 1.33% on August 13, which was the lowest on record based on FactSet data going back to early 2000.
None of this is a recommendation, and the report itself frames the move as a market rotation rather than a forecast. What it does show is a clear shift in October: as tech wobbles, funds built around established dividend payers in energy, healthcare, consumer staples and telecoms have kept climbing.
Whether that rotation lasts will depend on yields, earnings and the next leg for tech. For now, October belongs to dividend stocks.
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Source: MarketWatch — read the full story there.
