Safer, income-producing stocks are suddenly looking attractive.
Stock prices continue to grow to the sky, and the S&P 500 index has set 28 record highs this year through the end of September.
Moreover, valuations continue to stretch. At 39.7, the Shiller Cyclically Adjusted (CAPE) Ratio is at its second highest level of the past century (higher than the eve of the Great Crash of 1929, though still a bit lower than the eve of the Internet bubble burst in 1999).
Investing in defensive stocks that are less vulnerable to market pullbacks, drawdowns, and corrections is one great idea. And here’s an even better idea: Buying reliable, stable defensive stocks that pay high dividends and reward investors with passive income.
Stability and income
So, what’s the best exchange-traded fund (ETF) to buy right now if you want exposure to defensive stocks that provide stable earnings and dividends? I like the Vanguard High Dividend Yield ETF(VYM) because it gives you a stake in a broad swath of high-yielding, stable, large-cap value stocks. Thus, you get safety and reliable passive income, and at a rock-bottom price.
The Vanguard High Dividend Yield ETF tracks the performance of the FTSE High Dividend Yield Index, which measures the return of a set of stocks characterized by high dividend yields. With total assets of $81.3 billion, the fund currently holds 579 stocks. Its top five holdings are:
Broadcom, which accounts for 6.7% of the fund
JPMorgan Chase, 4.1%
ExxonMobil, 2.4%
Johnson & Johnson, 2.1%
Walmart, 2.1%
Such big, safe companies — ones that we would expect to be around for the long haul — are typical of the fund’s holdings. And it avoids risky and distressed firms.
Other than chipmaker Broadcom, no one stock currently accounts for more than 5% of the ETF, which makes it highly diversified. It’s also diversified among sectors. Its biggest holding by sector is financials, with about 22% of its assets in that industry. It also has large positions in consumer discretionary, healthcare, industrials, and technology, among a few other sectors.
The fund’s current yield is a very respectable 2.49%, about 1.3 percentage points above that of the S&P 500. The annual fee is a minuscule 0.06%, which is far lower than the 0.87% average for similar funds. The ETF is up about 10.4% year to date, which is solid given the income it produces.
Not so boring
Investors who think dividends are boring should think again. From 1940 to 2024, dividend income contributed 34% of the total return of the S&P 500, according to Hartford Funds.
Source: Getty Images.
That contribution varies a lot by decade. Dividends contribute a larger share of the total market return when the stock market is rising slowly, and a smaller share when it’s soaring. That makes sense. Companies with higher-yielding stocks tend to be large and slower-growing, just what you want to own in a challenging market environment.
Yes, there are stocks with much higher yields than those in the Vanguard High Dividend Yield ETF. But that’s by design, too. The fund avoids stocks with deteriorating fundamentals and declining prices, limiting its exposure to risky companies.
Best of all — considering the bubbly nature of the current stock market — this dividend ETF outperforms in difficult markets. It beat similar funds during the COVID-19 sell-off of early 2020 and outperformed other funds in its category by 7 percentage points in 2022, when the S&P 500 fell more than 19%.
The Vanguard High Dividend Yield ETF provides a steady, safer approach to higher-yielding stocks, and reliable passive income. Such an approach is beginning to look very attractive to many investors.
JPMorgan Chase is an advertising partner of Motley Fool Money. Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and Walmart. The Motley Fool recommends Broadcom and Johnson & Johnson. The Motley Fool has a disclosure policy.
The design is ultra-portable, slimmer than a centimetre thick, weighing only 109g, and about two-thirds the size of a phone.
Despite the compact body, it carries a 5000mAh capacity, enough to comfortably get most people through a day without scrambling for a wall socket.
The big sell here is the strong magnetic connection, engineered with a grip force that snaps securely to your iPhone.
There’s no button-pressing or fiddling around; the Dbasne charger attaches instantly and starts charging automatically.
Wireless charging gets you from zero to around 55% in just half an hour on iPhone 12 through 16 series.
While the USB-C outport is there if you prefer a wired boost, pushing you up to 70% in the same time.
It’s a fast and fuss-free option, and reliable enough for daily use or travel.
It also comes with built-in protections against overheating, overcharging, and voltage spikes, giving peace of mind.
Another clever touch is the retractable lanyard cable, which doubles as a charging cord.
It cuts out clutter and keeps the charger close at hand, whether you’re commuting, at the office, or heading out away from a wall charger.
While I’m impressed by the design and value, it’s not just me taking notice.
Shoppers themselves have given it a rare 5-out-of-5-star rating with a 97% approval rate on Amazon, which is almost unheard of for a product in this category.
One buyer raved: “Small, quick, and dependable, what a lifesaver this power bank is. It is ideal for everyday usage or travel, and a phone can be charged multiple times thanks to the battery’s strong capacity.”
Another called it an “Awesome little powerbank”
They added that it’s “Lightweight, charges with cable or wireless. Quick charge, fits in small purses, besides, it’s really cute and smooth.”
A third praised its longevity: “Reliable and powerful. The battery lasts a surprisingly long time.”
“I can use it for multiple charges without recharging the power bank itself. It’s perfect for travel, busy days out.”
This isn’t the only tech deal I’ve had my eyes on of late.
DRIVERS looking to buy an affordable but reliable older motor should consider one of these top 10 picks from the Which? annual car survey.
The consumer group has revealed a list of cars it recommends with five-star reliability ratings between 10-15 years old, some for less than £3,000.
From nippy city cars to big family SUVs, there are options for all drivers hunting for a bargain buy that doesn’t scrimp on quality.
Michael Passingham, senior researcher at Which?, told thisismoney that hybrid cars have come to dominate the list of most reliable, older vehicles.
He said: “Why do these cars perform so well? One reason could be that the hardest part of a car’s life – starting and pulling away – are mostly handled by the small electric motor.
“These motors have fewer moving parts than combustion engines and, along with sturdy main battery packs, really don’t have to work all that hard.
“The downside is that our data shows a much higher failure rate of the 12V battery (the small battery all cars have) on full hybrids; this component is worked hard so it pays to buy a quality one and get it replaced every five years or so.”
In good news for consumers, so called ‘full’ hybrids’ have been removed from the 2030 ban on sales of new petrol and diesel cars planned by the government.
Micheal warned against opting for a plug-in hybrid, saying that this type of car has “one of the least reliable engine types according to our data”.
Here is the full list of the 10 best buys for the most reliable older cars…
10. Toyota Auris (2012-2019)
Average used price: £4,650
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The Toyota Auris is a great option for those wanting a green car that boasts impressive reliability especially for the priceCredit: Alamy
Faults: 28% Breakdowns: 7% Days off the road: 5.3
The predecessor to the Toyota Corolla, the Auris served as the brands family hatchback offering for almost two decades until it was replaced in 2019.
The second generation Auris, sold between 2012-2019, boasts impressive reliability with less than three in ten owners reporting faults in the last year, and only seven per cent saying their vehicle broke down.
The average price of £4,650 makes this a competitive option when looking for a family, and environment, friendly hatchback.
The only caveat is that the Auris took an average of 5.3 days to get back on the road after a breakdown, which is higher than other cars on this list.
Princess Andre hits back at money-shaming trolls who claim ‘Peter and Katie Price bought her £10k motor as first car’
9. Suzuki Alto (2009-2014)
Average used price: £2,800
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The Suzuki Alto is a small city-friendly car that is simple enough to get repaired cheaply and get back on the road quicklyCredit: Alamy
Faults: 25% Breakdowns: 1% Days off the road: 2.6
The Suzuki Alto, released in 2009, is still living up to its promise of being a cheap, compact and reliable supermini.
It was first offered for £6,000-£7,000 and now can be snapped up for less than three grand, the cheapest buy on this list.
The simplicity of the Alto makes it a particularly reliable option, with just 1 per cent reporting breakdowns in the last 12 months, and a quarter saying they had to deal with faults.
If it does need a repair, the Alto’s simplicity means it gets back to you in an average of only 2.6 days.
8. Toyota Yaris (2011-2020)
Average used price: £3,100
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The Toyota Yaris has a great track record of reliability, making it one of the most popular hatchbacks of the last 25 yearsCredit: Handout
Faults: 23% Breakdowns: 6% Days off the road: 3.1
The go-to small, dependable car for many in the last 25 years, the Yaris, is still making recommendation lists for its affordability and reliability.
With less than a quarter reporting faults and only 6 per cent dealing with a breakdown in the last 12 months, the Yaris still holds up remarkably well after all this time.
This is the 2011-2020 model with a hybrid drivetrain, an addition which makes it economical to drive as well as to buy, averaging just over £3,000.
7. Suzuki Swift (2010-2016)
Average used price: £3,500
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Suzuki Swift is considered by some an overlooked gem of the supermini classCredit: Getty
Faults: 27% Breakdowns: 8% Days off the road: 1.4
Suzuki appears again on this list with the 2010-2016 Swift supermini, a compact, simple vehicle at a compelling price.
Received positively upon release, the Swift was praised for being fun to drive with a competitive blend of efficiency and performance.
Now on sale for only around three and a half grand, this might be a great option for those looking for a small but fiery little motor.
Although it scores a little worse on breakdowns, with 8 per cent being the highest on this list, it does only spend a brief 1.4 days in the shop when things do go wrong.
Couple this with a good score of 27 per cent reporting faults, and this characterful car is still a good buy in 2025.
6. BMW X1 (2009-2015)
Average used price: £5,200
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The BMW X1 is surprisingly reliable for a big luxury SUVCredit: handout
Faults: 35% Breakdowns: 7% Days off the road: 2.1
In a shock entry to this list, the BMW X1 is an outlier for luxury SUVs, which are often unreliable and costly to repair.
On the contrary, the X1 competes with other, much smaller, simpler cars with a respectable record of just 7 per cent reporting breakdowns last year and only 2.1 days taken to fix on average.
Consumers may be able to take advantage of typically low SUV resale prices, generally due to reliability and repair cost concerns, to pick up this hidden gem for a very reasonable price of around £5,000.
That said, the X1 does rank low on this list in terms of faults, with over a third experiencing issues in the last 12 months.
5. Skoda CitiGo (2009-2019)
Average used price: £4,500
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The Skoda Citigo is mechanically identical to the popular VW Up! making it a great choice for a small car on a budget that also boasts good reliabilityCredit: Getty
Faults: 22% Breakdowns: 5% Days off the road: 2.8
Mechanically identical to the VW Up!, the Skoda CitiGo was meant for squeezing into tight parking spaces and down narrow streets while keeping your fuel costs and insurance premiums to a minimum.
After being discontinued five years ago, the CitiGo now makes for a tempting prospect on the second-hand market.
It was initially praised for being surprisingly roomy for being so small, and for being the cheaper alternative to the Up! while essentially being the same car.
It boasts impressive reliability, with only 22 per cent reporting faults and 5 per cent experiencing a break down.
The CitiGo is fairly quick to repair as well, only spending 2.8 days at the garage before being ready for more.
4. Honda Jazz (2008-2015)
Average used price: £3,800
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The Honda Jazz is popular among older drivers, but this doesn’t mean it’s not a great option for a convenient and reliable motorCredit: handout
Faults: 25% Breakdowns: 4% Days off the road: 2.7
Almost exclusively driven by those of a certain age, the Honda Jazz is popular amongst the older demographic for a reason: its convenient, reliable and easy to drive.
These attributes might get Grandma excited, but they should also make the Jazz an attractive option for anyone looking for a solid vehicle at a bargain price.
One in four owners reported a fault with their cars and the average time in the garage was 2.7 days being fixed by mechanics.
Your Jazz shouldn’t be seeing the inside of a garage too often though, with only 4 per cent breaking down in the last year.
3. Lexus RX 450h (2009-2015)
Average used price: £6,400
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The Lexus RX 450h is a very reliable option for a big family motor, breakdowns are very rare according to Which?Credit: Handout
Faults: 16% Breakdowns: 0% Days off the road: 2
This chunky SUV was voted the most satisfying car to own in 2024 in a Which? survey.
A glance at the cars record quickly confirms that one of the factors that make it so popular must be its excellent reliability.
Looking at the hybrid-powered models here, only 16 per cent reported a fault in the last year and none had their RX break down on them.
For the times that the RX was sent into the garage, it only spent 2 days on average being worked on.
The price is a little higher than some others on this list, but buyers are getting both space, comfort and relatively good fuel efficiency.
2. Mazda MX-5 (2005-2015)
Average used price: £3,800
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The Mazda MX5 Roadster Coupe is a British icon, and could be yours for less than £4,000 if you opt for an older modelCredit: Getty
Faults: 26% Breakdowns: 0% Days off the road: 1.7
The iconic MX-5 speeds into the number two spot for good reason, bucking the trend of unreliable sports car to still deliver thrilling driving with solid build quality at a good price.
Hailing originally from the late 1980’s, this example of the world’s best selling roadster is the third generation MX-5, it debuted in 2005 and still holds up today.
The record from Which?’s data is flawless when it comes to breakdowns, and shows that this classic is quick to fix only spending 1.7 days in the shop.
Just over a quarter reported faults, but that’s not a huge figure when it comes to second-hand sports cars.
1. Lexus CT 200h (2011-2020)
Average used price: £7,300
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The Lexus CT 200h is the number one car according to the Which? car survey for reliabilityCredit: PR handout
Faults: 13% Breakdowns: 0% Days off the road: 1.2
Topping the list as the most reliable 10 to 15 year-old car comes the Lexus CT 200h, a full hybrid hatchback which served as the brands answer to the Ford Focus and VW Golf until 2020.
CT 200h owners surveyed by Which? delivered glowing reviews, reporting zero breakdowns and only 13 per cent experiencing a fault with their car.
Drivers praised the vehicles comfort and, of course, reliability, only pointing to a small boot and clunky infotainment system as critiques, as reported by thisismoney.
The car sells for around £7,000, the priciest offering so far, but its near spotless record should mean your investment pays off with a dependable motor that is good for years to come.
The ones to steer clear of
Which? puts the diesel powered Vauxhall Zafira (2005-2014) and Nissan Qashqai (2007-20013) as two of the least reliable vehicles that consumers should steer well clear of if dependability is their aim.
The Zafira has become known for catching fires in recent years due to issues with its heater blower motor and regulator. This usually happens when owners replace parts with cheaper, aftermarket components.
It is hardly a wonder that drivers are turning to cut-price alternatives when the Zafira breaks down on three in ten owners, with more than half reporting faults in the last year.
The car also takes a whopping 14 days on average for repairs to be made.
The first generation Nissan Qashqai also from suffers reliability issues, and needs almost a week in the garage on average before it is road-ready after a malfunction.
Both these cars use diesel fuel, and Which? has found that this is by far the worst fuel type for reliability, with an average fault rate of 48 per cent, compared to 39 per cent for petrol and 23 per cent for hybrids.
