Dividend payouts are set to hit a record this quarter. Here are the top ways to play

Published Tue, Aug 3 202112:48 PM EDTUpdated Tue, Aug 3 20211:12 PM EDT

Dividend payments are set to hit a record this quarter as the economy recovers and after the banking sector got approval for payout hikes from the Federal Reserve. Investors can look to top exchange-traded funds and Wall Street-favored stocks to get in on the dividend momentum. A dividend is a payout of a portion of a company's profits to its shareholders. Dividend-paying stocks and ETFs give regular payments to investors. "The current working view for S & P 500 dividends continued to improve (aided by Fed approval for higher dividends in the second half), as COVID-19 vaccine availability was plentiful (with concern over those who did not want to be vaccinated), permitting a wider reopening of America," said Howard Silverblatt, senior index analyst at S & P Dow Jones Indices. Major banks including JPMorgan Chase, Bank of America and Goldman Sachs, raised their dividends for the third quarter following the Fed stress test. Morgan Stanley doubled its payout. Cash dividend payments in July increased 10.6% from a year earlier, according to Silverblatt's analysis. The median dividend increase in July was 11.1%, up from last month's 8.3% and July 2020's 6.3%, Silverblatt said. "Dividends were strong for the month, as banks followed through on Fed-approved increases. The actual Q3 2021 payment looks like a potential record," Silverblatt said. If vaccinations continue and the economy reopens, Silverblatt expects dividend payments to increase 5% for 2021, which would be a new annual record payment. Dividend ETFs Here are the top five dividend ETFs based on assets under management, according to ETF.com. (Source: ETF.com and FactSet. As of Aug. 3, 2021.) The Vanguard Dividend Appreciation ETF has the most assets under management at $61.76 billion. The fund is up 12.83% this year. Another Vanguard ETF, the High Dividend Yield fund, notches second place at $37.83 billion. The ETF has gained 14.9% in 2021. The Schwab U.S. Dividend Equity ETF came in third with $26.61 billion in assets under management. The fund has run up 18.5% this year. The SPDR S & P Dividend ETF and iShares Core Dividend Growth ETF round out the list. Wall Street's favorite dividend stocks CNBC Pro looked at members of the Vanguard Dividend Appreciation ETF and identified names with an average 12-month target price at least 10% higher than the stock's closing price Monday. From that pool, we found shares that at least 70% of Wall Street analysts say to buy. (Source: FactSet. As of Aug. 3, 2021.) CNBC Pro's screen includes big names in technology, health care and finance sectors like Microsoft , UnitedHealth Group and BlackRock Assurant is the most well-liked stock in CNBC PRO's screen with 87.5% of analysts calling it a buy. The average Wall Street analyst thinks the insurance company's shares can jump 21.3% in the next 12 months. Ameriprise Financial has seen the best 2021 performance out of the names on the list. The financial services company has jumped 33% this year and analysts on average think the stock can still run 11.5% higher within the next 12 months. Activision Blizzard has the highest implied upside out of the stocks in CNBC Pro's screen. The video game company's shares have trended downward recently as Activision Blizzard faces a lawsuit alleging a work culture of discrimination and harassment. Other favorite dividend stocks on Wall Street include Microchip Technology , Applied Industrial Technologies and Horizon Bancorp .

Dado Ruvic | Reuters