Exchange-traded funds (ETFs) that focus on high-yield dividend stocks can be excellent income-generating vehicles for investors. While most ETFs aim to track an index, there are also actively managed high-yield dividend ETFs that seek to outperform their benchmarks.
The following are five of the highest-yielding ETFs available today.
1. SPDR S&P Dividend ETF (SDY)
SDY tracks the S&P High Yield Dividend Aristocrats Index, which consists of companies that have increased their dividends for at least 20 consecutive years. The fund has $16.1 billion in assets and an expense ratio of 0.35%.
SDY’s top holdings include utility stocks like Dominion Energy (D) and Southern Company (SO), as well as financial stocks like JPMorgan Chase (JPM) and Wells Fargo (WFC). The ETF has a trailing 12-month yield of 3.64%.
2. iShares Select Dividend ETF (DVY)
DVY tracks the Dow Jones U.S. Select Dividend Index, which is made up of 100 of the highest-dividend-yielding stocks in the U.S. The fund has $12.8 billion in assets and an expense ratio of 0.40%.
DVY’s top holdings include utility stocks like Dominion Energy and Southern Company, as well as financial stocks like JPMorgan Chase and Wells Fargo. The ETF has a trailing 12-month yield of 3.24%.
3. Vanguard High Dividend Yield ETF (VYM)
VYM tracks the FTSE High Dividend Yield Index, which consists of 400 of the highest-dividend-yielding stocks in the U.S. The fund has $19.1 billion in assets and an expense ratio of 0.08%.
VYM’s top holdings include utility stocks like Dominion Energy and Southern Company, as well as financial stocks like JPMorgan Chase and Wells Fargo. The ETF has a trailing 12-month yield of 3.22%.
4. iShares Core High Dividend ETF (HDV)
HDV tracks the Morningstar US Dividend Growth Index, which consists of 100 of the highest-dividend-yielding stocks in the U.S. The fund has $5.6 billion in assets and an expense ratio of 0.08%.
HDV’s top holdings include utility stocks like Dominion Energy and Southern Company, as well as financial stocks like JPMorgan Chase and Wells Fargo. The ETF has a trailing 12-month yield of 3.21%.
5. SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
SPYD tracks the S&P 500 High Dividend Index, which consists of the 100 highest-dividend-yielding stocks in the S&P 500. The fund has $4.2 billion in assets and an expense ratio of 0.25%.
SPYD’s top holdings include utility stocks like Dominion Energy and Southern Company, as well as financial stocks like JPMorgan Chase and Wells Fargo. The ETF has a trailing 12-month yield of 3.17%.There are many different types of ETFs with varying yields. Some of the highest yielding ETFs include the iShares iBoxx $ High Yield Corporate Bond ETF (HYG), the SPDR Bloomberg Barclays High Yield Bond ETF (JNK), and the VanEck Vectors Fallen Angel High Yield Bond ETF (ANGL). These ETFs offer yields of around 6-7%, which is significantly higher than the yield on most other types of investments.There are a few things to consider when looking for the highest yielding ETFs. The first is the type of ETF. Some ETFs, such as REITs, are required by law to pay out 90% of their income as dividends. This makes them some of the highest yielding ETFs available. However, these ETFs are also some of the riskiest because they are highly dependent on the real estate market.
Another thing to consider is the expense ratio of the ETF. The expense ratio is the annual fee that the ETF charges to cover its expenses. The lower the expense ratio, the higher the yield will be.
Finally, it is important to consider the dividend yield of the underlying stocks in the ETF. The dividend yield is the percentage of the stock price that is paid out as a dividend. For example, a stock with a dividend yield of 3% will pay $0.30 in dividends for every $10 of stock price. A higher dividend yield means a higher income for the investor.
The following ETFs have high yields and low expense ratios:
Vanguard REIT Index ETF (VNQ)
iShares US Real Estate ETF (IYR)
Schwab US REIT ETF (SCHH)
ProShares Ultra Real Estate (URE)
These ETFs offer investors exposure to the real estate market with high dividend yields and low expense ratios. However, they are also some of the riskiest ETFs because they are highly dependent on the real estate market.
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