Stock futures hold firm on solid earnings; Wall Street set for weekly gains

Investors are piling into stocks that offer high dividends, drawn by the lure of chunky payouts in the often-underperforming group ahead of expected interest-rate cuts later this year.

Flows into the five largest exchange-traded funds focused on dividend payers hit $17.5 billion last week, a nearly 10-fold increase from the start of 2024, according to data from Purpose Investments Inc.

Part of the funds’ popularity rests on expectations that the Federal Reserve is getting closer to cutting interest rates, pushing income-seeking investors to look for yield opportunities outside of bonds.

The group has also lagged broader markets in recent years, magnifying the per-share dividend payout companies offer: This week, there were 45 members of the S&P 500 Index offering dividend yields in excess of the 4.33% rate on three-month Treasuries, compared to 14 members beating that yield last year.