Dividend Stocks

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>>> Inexpensive, High-Dividend ETFs to Buy


Todd Shriber

InvestorPlace

March 13, 2019


https://finance.yahoo.com/news/7-inexpensive-high-dividend-etfs-190946673.html


Editor’s note: This story was previously published in September 2018. It has since been updated and republished.

The universe of exchange-traded funds (ETFs) is awash in low-fee products, and the space is growing as issuers reduce their fees to lure investors.

Income-seeking investors do not have to pay up to access high-dividend ETFs. In fact, numerous high-dividend ETFs can be inexpensive, which is an important point for income investors looking to keep more of those dividends and a higher share of their invested capital. High-dividend ETFs are often embraced by long-term investors and over the long-term, lower fees can mean better outcomes for investors.

Over the past several years, data confirm that when it comes to adding new assets, the best ETFs are usually those with annual fees of 0.20% or less. Plenty of high-dividend ETFs fit into that category, making it a cost-effective method for thrifty investors to access broad baskets of dividend stocks.

Here are some high-dividend ETFs, with very low fees, for income-minded investors to consider.

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iShares Core High Dividend ETF (HDV)
Expense Ratio: 0.08%, or $8 annually per $10,000 investment

Many high dividend ETFs weight components by yield, a strategy that has some drawbacks. Those disadvantages include vulnerability to rising interest rates and the potential for exposure to financially challenged companies that may have trouble maintaining and growing dividends.

The iShares Core High Dividend ETF (NYSEARCA:HDV) has a 12-month dividend yield of 3.03%, which is well above the S&P 500 and 10-year Treasuries. However, this high-dividend ETF follows the Morningstar Dividend Yield Focus Index, which screens companies for financial health, giving the fund a quality look.

With an annual fee of just 0.08%, HDV is one of the cheaper high dividend ETFs on the market today. That low fee coupled with its sector allocations make HDV ideal for conservative investors. The healthcare, consumer staples, telecom and utilities sectors, four of HDV’s top five sector weights, can all be considered defensive groups.

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SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
Expense Ratio: 0.08%

The SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD) is one of the least expensive dividend ETFs on the market, high dividend or otherwise. The ETF tracks the S&P 500 High Dividend Index, the high-dividend offshoot of the traditional S&P 500.

SPYD’s yield requirement gives this high-dividend ETF a focused roster of just 80 stocks, but the 12-month dividend yield of 4.65% makes this high-dividend ETF appealing for income investors relative to standard broad market funds.

SPYD relies heavily on high income sectors that have shown historical vulnerability to rising interest rates — a trait to keep in mind in the current market environment. The real estate and utilities sectors combine for almost 35% of this high dividend ETF’s weight.

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Vanguard High Dividend Yield ETF (VYM)
Expense Ratio: 0.06%

Home to $22.72 billion in total net assets, the Vanguard High Dividend Yield ETF (NYSEARCA:VYM) is one of the largest dividend ETFs of any variety. It is not unreasonable to believe that VYM’s name frames the fund as a high-dividend ETF, but a yield of 3.44% is not alarmingly high.

More importantly, VYM is not overly dependent on rate-sensitive sectors. This high-dividend ETF features no real estate exposure and the bond-esque telecom and utilities sectors combine for just 12.80% of VYM’s weight.

A quarter of the fund’s holdings hail from the industrial and healthcare sectors. Financials, a sector that has been a major driver of S&P 500 dividend growth over the past year, is this high dividend ETF’s largest sector exposure at 15.3%.

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JPMorgan U.S. Dividend ETF (JDIV)
Expense Ratio: 0.12%

The JPMorgan U.S. Dividend ETF (NYSEARCA:JDIV) is one of the youngest funds on this list, having debuted in late 2017, but it fits the bill as a cost-effective, high-dividend ETF. JDIV “utilizes a rules-based approach that adjusts sector weights based on volatility and yield and selects the highest yielding stocks,” according to the issuer.

With a 12-month yield of 4.07%, JDIV has high-dividend ETF credentials. JDIV’s annual fee of 0.12% is quite low.

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