The rising trend of the US stock market has expanded, driving the increase of stocks with the highest dividend yield, which is good news for investors whose dividend yields have lagged behind technology stocks in recent months. Even after Thursday's pullback, it's still wise to hold high-yield stocks.

How have dividend stocks performed? This Wednesday, the Schwab U.S. Dividend Equity exchange-traded fund set a new record high. According to Dow Jones market data, the fund rose for eight consecutive days, with a growth rate of 6.6% during the period, which is the best eight-day increase since November 2022.

This has come as a welcome relief for dividend-loving investors. Since the end of the last rally, the ETF's gains have lagged behind the S&P 500 Index by about 30 percentage points. It's not just Schwab's products that have been underwhelming - most dividend ETFs have underperformed the market. Even the purchase of ProShares S&P 500 Dividend Aristocrats ETF (which holds more than 60 companies that have raised their dividends annually in the past 25 years, including Coca-Cola, Sherwin-Williams and Colgate-Palmolive) to improve the quality ladder has been futile. The performance of the fund has lagged behind by 40 percentage points since the end of 2022.

Despite poor performance, dividend-paying companies still have many commendable qualities. The average yield of dividend-paying companies in the S&P 500 Index is about 2.3%, and their earnings for 2024 are about 25 times. Their profits are expected to grow at an average rate of about 10% per year in the coming years. The average yield of the approximately 100 companies in Schwab's holdings is about 3.7%, and the average annual profit growth rate of these companies is expected to be about 6% in the coming years. Their P/E ratio is about 16 times. The average yield of dividend aristocrats is about 2.4%, and their P/E ratio is about 23 times. Their expected annual profit growth rate in the coming years is 7%.

Buying high-quality stocks is usually a good idea, but dividend aristocrats have always been in an uneasy middle position. In recent years, investors have either wanted higher earnings growth or higher dividend yields, with the former being more popular than the latter. This means holding the largest technology stocks, including Microsoft (MSFT.O), Nvidia (NVDA.O) and Apple (AAPL.O), which have driven most of the market's gains so far in 2024. The P/E ratio of these top ten technology stocks is about 38 times, but their expected annual profit growth rate is about 17% in the coming years. The average yield of these stocks is about 0.8%.

However, while the Nasdaq Composite Index is declining, the Schwab U.S. Dividend Equity Index is hitting new highs. If other stocks are poised for a rebound, it's best to choose stocks with relatively high yields, or even the highest yielding stocks. The yield of the SPDR Portfolio S&P 500 High Dividend ETF is about 4.5%, and the average P/E ratio of the stocks is about 16 times. Also, the fund is still about 5% below its historical high, so there is still some room for growth.

Although it has been a while, income investing may be ready to pay off dividends.