Dividends stocks are a backbone of many portfolios, especially among older clients and retirees that rely on that income. Unfortunately for these individuals, dividend stocks have been among the worst performers not only this year but also across the last several years. With dividend stocks in the gutter, is the group due for some rebound, or are there other areas we can look for income?

The Invesco High Yield Equity Dividend Achievers ETF (PEY) has historically been among the better dividend funds out there, but with most dividend stocks floundering, the fund has reached historic levels of market underperformance. The fund is down YTD, below levels it reached in May of 2021, and its last three years are quite literally its worst on record. Specifically, PEY has gained 17.2% over the last three years, lagging the S&P 500 by 65%, which is the worst three-year span for the fund by a full 15%. All this relative underperformance has culminated in significant lack of relative strength. PEY holds an extremely weak fund score of 1.13, which is 3.87 points behind the iShares S&P 500 ETF (IVV). That gap between the two funds is near the largest ever, so it could be some time before we see the group’s strength rebound.

Since many investors live on their dividend income, it’s not realistic to cut those names out of a portfolio entirely, even during period of weakness like this one. Domestic equities do have individual dividend names that offer strength (many of which can be found on the yield buy list), but another area that investors could look toward for is international equities. Unlike the domestic market dominated by leadership in risk-on areas, international equities have been led by more value-oriented areas, including dividend stocks.

One prime example of this is the iShares Dow Jones International Select Dividend ETF (IDV). The fund has traded in a positive trend for nearly three year and is on a streak of three consecutive buy signals after gaining more than 40% this year. IDV also holds a near-perfect fund score of 5.89 that’s 4.6 point higher than PEY. That fund score difference between the two is currently at its widest spread recorded, so it makes more sense than ever to look for dividend names abroad rather than domestically. While dividends broadly remain out of favor, those willing to get creative can still take advantage of select areas of strength like these where momentum is most prominent. Remember, international names carry with them different risks than those here domestically, something to keep in mind when considering suitability within client portfolios. 

One could be forgiven for thinking there isn't much going on in the healthcare sector. It currently ranks eighth in the DALI sector rankings, putting in underweight territory, and hasn't climbed higher than sixth in the last three years. However, a trip to the Asset Class Group Scores (ACGS) page tells a different story. In the ACGS rankings, healthcare currently sits in the top decile (13th out of all 134 groups in the system), higher than any of the 10 other GICS sectors; meanwhile, the biotechnology subsector ranks fourth of all groups in the system. Biotechnology and healthcare also have the two highest score directions of all groups in the system at 3.94 and 3.25 respectively, showing that both groups have improved significantly over the short-term.

The Asset Class Group Scores and DALI serve the same basic function – identifying areas of strength and weakness in the market. So, why is healthcare in the bottom tier of the DALI rankings while the ACGS show a positive technical picture for the sector? The simple answer is that the ACGS change more quickly than DALI. DALI relies solely on relative strength, utilizing matrices and proxy funds to derive its rankings. If a sector has had a long period of underperformance, it can take a while for it to generate the relative strength buy signals required to climb the rankings. The ACGS also relies on relative strength, but it also incorporates metrics that pick up absolute performance – like move averages and trend – which can often change more quickly. This does not mean that one system is inherently better or worse than the other – only that the ACGS may show signs of a developing trend earlier than DALI.

And so, currently we see signs of strength building in healthcare and biotech, which have not yet begun to show up in DALI. Whether this turns into a long-term trend that see healthcare climb to upper echelon of the DALI rankings remains to be seen, but there is already enough meat on the proverbial bone to for trend followers to consider increasing their healthcare and/or biotech exposure. And if you’re concerned about the market’s lackluster performance over the short term, healthcare has the added benefit of being a traditionally defensive sector.

Those interested in adding broad healthcare exposure can consider the State Street Healthcare Select Sector SPDR ETF (XLV). XLV has a 4.26 fund score which is well within the favorable score range but is 0.32 points lower than the average for all healthcare funds; it also has a positive 3.07 score direction.

While XLV is certainly an acceptable option, the highest scoring funds within the sector are primarily biotech or pharmaceutical focused. The iShares US Pharmaceuticals ETF (IHE) has a near-perfect 5.82 fund score, which is 1.25 points better than the average for all healthcare funds, and a positive 4.41 score direction. In November, the fund gave a buy signal on market RS chart for the first time since 2021. On its default chart, IHE has completed four consecutive buy signals and currently sits just off its all-time high. The fund currently sits in heavily overbought territory with a weekly overbought/oversold (OBOS) reading of 81%, so those interested in adding exposure may be best served to do so on a pullback into the lower $80s.

The Invesco Nasdaq Biotechnology ETF (IBBQ) has a similarly strong 5.78 fund score and positive 5.09 score direction. Like IHE it also moved to a market RS buy signal in November.  IBBQ also trades just off the all-time high it reached last month, but unlike IHE, it remains in actionable territory on its 10-week band with a weekly OBOS reading of 52%. On its default chart, IBBQ moved from $19.75 to $29 in a single column of Xs and shows no nearby support on its default chart. However, its more sensitive $0.25-per-box chart shows that IBBQ briefly reversed down and found support at $26 in November before continuing higher.

Daily Option Ideas for December 18, 2025