In this article, we will look at 10 dividend ETFs to consider for retirement.
What are ETFs
An ETF, or exchange-traded fund, is a collection of multiple securities. ETFs can be centered around market indices, commodities, industrial sectors, foreign exchange, fixed income, or other assets. The way ETFs work is much similar to that of a mutual fund, however, ETFs can be traded on stock exchanges and mutual funds cannot. ETFs can help investors to diversify their portfolios which can help mitigate risk.
How ETFs help in Retirement
ETFs have a lot to offer, for instance, handsome and consistent dividend yields. ETFs also offer the diversification benefits of a mutual fund, which is often a key ingredient for risk management. ETFs are cheaper to own than individual stocks and are suitable for long-term investors that are saving up for retirement. Instead of buying individual stocks that belong to a specific industry, you can invest in an industry ETF. Some ETFs offer low expense ratios and some brokers do not charge commissions for certain ETFs which can help reduce your expenses and can help set you up for retirement.
Why Invest in Dividend ETFs
Dividend-paying exchange-traded funds not only help you in diversifying your portfolio but also help you in developing a passive income stream. Dividend ETFs that are modeled after market indices that track stocks like Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), International Business Machines Corporation (NYSE:IBM), Chevron Corporation (NYSE:CVX), Johnson & Johnson (NYSE:JNJ), and The Coca-Cola Company (NYSE:KO) are a safer investment option to consider, as opposed to investing in individual company stocks.
Legendary value investor Warren Buffett shared his words of wisdom on the subject at the 2021 annual Berkshire Hathaway meeting. Mr. Buffett pointed out that individual stock picking is not for everyone and why most amateur investors are more likely to reduce their risk and maximize their profits by investing in low-cost index funds for longer periods.
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10 Dividend ETFs to Consider for Retirement
10. VictoryShares US Large Cap High Div Volatility Wtd ETF (NASDAQ:CDL)
VictoryShares US Large Cap High Div Volatility Wtd ETF (NASDAQ:CDL) is an exchange-traded fund launched and managed by Victory Capital Management Inc. The fund tracks the investment results of the Nasdaq Victory US Large Cap High Dividend 100 Volatility Weighted Index, which is a volatility weighted index consisting of the top 500 U.S. companies by market capitalization.
As of February 28, 2022, VictoryShares US Large Cap High Div Volatility Wtd ETF’s (NASDAQ:CDL) average annual returns totaled 12.29%. This is compared to the annual returns of the Nasdaq Victory US Large Cap High Dividend 100 Volatility Weighted Index, which returned 13.06% over the same period. The fund currently tracks 102 stocks, most of which are spread across the consumer staples, financials, and utilities sectors.
VictoryShares US Large Cap High Div Volatility Wtd ETF (NASDAQ:CDL) has a top-ten holdings concentration of 15.39% and tracks movements of dividend stocks that offer handsome yields, like Johnson & Johnson (NYSE:JNJ), PepsiCo, Inc. (NASDAQ:PEP), AbbVie Inc. (NYSE:ABBV), Verizon Communications Inc. (NYSE:VZ), and Chevron Corporation (NYSE:CVX).
9. Fidelity High Dividend ETF (NYSE:FDVV)
Fidelity High Dividend ETF (NYSE:FDVV) is an exchange-traded fund launched and managed by Fidelity Management & Research Company LLC. The fund initiates long positions in growth and value stocks of companies of different market capitalizations. The fund is mapped on the Fidelity High Dividend Index.
As of February 28, 2022, Fidelity High Dividend ETF (NYSE:FDVV) annualized returns equal 21.90% closely tracking the Fidelity High Dividend Index, which reported annualized returns of 22.28%. The fund has a gross expense ratio of 0.29% which equals $29 annually per every $10,000 invested, and a trailing-twelve-month dividend yield of 2.75%.
Fidelity High Dividend ETF (NYSE:FDVV) has 115 holdings in total as of February 28, 2022. The fund’s top-ten holdings concentration is 28.29%. Among Fidelity High Dividend ETF’s (NYSE:FDVV) top ten holdings we have Exxon Mobil Corporation (NYSE:XOM), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and Chevron Corporation (NYSE:CVX).
8. SPDR S&P Dividend ETF (NYSE:SDY)
SPDR S&P Dividend ETF (NYSE:SDY) tracks the investment results that correspond to the total return performance of the S&P High Yield Dividend Aristocrats Index. The S&P High Yield Dividend Aristocrats Index tracks companies that have been consistent with their dividend increases for at least 20 years, which qualifies them as dividend aristocrats. This index, therefore, contains stocks that have both capital growth and dividend income characteristics instead of stocks that offer only attractive yields.
SPDR S&P Dividend ETF’s (NYSE:SDY) 1-year annualized returns equaled 16.03%, closely tracking the S&P High Yield Dividend Aristocrats Index which reported 1-year annual returns of 16.45% as of the end of February 2022. The fund offers a trailing-twelve-month yield of 2.71%
The fund’s holdings are mainly concentrated in the financials, industrials, consumer goods, and utilities sectors. The fund has a top-10 holdings concentration of 19.08% as of February end 2022. Among the fund’s top holdings we see high-yielding dividend stocks such as Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), International Business Machines Corporation (NYSE:IBM), and Chevron Corporation (NYSE:CVX).
7. Vanguard High Dividend Yield ETF (NYSE:VYM)
Vanguard High Dividend Yield ETF (NYSE:VYM) tracks the FTSE High Dividend Yield Index, which consists of companies that offer high dividend yields. The fund follows a passive management full replication approach.
Vanguard High Dividend Yield ETF (NYSE:VYM) reported average annual returns of 18.96% on February 28, 2022. This is compared to returns of the FTSE High Dividend Yield Index which came to 19.04%. The fund’s trailing twelve-month yield sits at 2.82% and has an expense ratio of 0.06%.
As of the end of February, Vanguard High Dividend Yield ETF (NYSE:VYM) has 413 stocks on its portfolio. The top ten holdings of the fund include Johnson & Johnson (NYSE:JNJ), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and The Coca-Cola Company (NYSE:KO).
Like JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), and PepsiCo, Inc. (NASDAQ:PEP), Vanguard High Dividend Yield ETF (NYSE:VYM) is a good investment option to consider.
6. Schwab U.S. Dividend Equity ETF (NYSE:SCHD)
Schwab U.S. Dividend Equity ETF (NYSE:SCHD) mirrors the total return of the Dow Jones U.S. Dividend 100 Index, the index it is modeled after. The index is comprised of stocks that, firstly, offer sustainable dividends, and secondly, have strong performance history. The fund has a trailing twelve-month yield of 2.92% and an expense ratio of 0.06%, which equals $6 per $10,000 invested.
Schwab U.S. Dividend Equity ETF’s (NYSE:SCHD) annualized 1-year returns were reported at 17.87% as of February 28, 2022. This is compared to the 1-year returns of the Dow Jones U.S. Dividend 100 Index which came to 18%.
As of February end, 2022, Schwab U.S. Dividend Equity ETF (NYSE:SCHD) has a top-ten holdings concentration of 40.37% and has stakes in 105 public equities. Among the fund’s top holdings we see International Business Machines Corporation (NYSE:IBM), The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NASDAQ:PEP), and Verizon Communications Inc. (NYSE:VZ).
International Business Machines Corporation (NYSE:IBM), Verizon Communications Inc. (NYSE:VZ), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corporation (NYSE:BAC) are some of the most popular dividend-paying stocks among investor circles. The Schwab U.S. Dividend Equity ETF (NYSE:SCHD) can help you gain exposure to these stocks.
5 Dividend ETFs to Consider for Retirement
5. VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB)
The VictoryShares US Small Cap High Div Volatility Wtd ETF (NASDAQ:CSB) is an ETF modeled after the Nasdaq Victory US Small Cap High Dividend 100 Volatility Weighted Index before fees and expenses. The fund offers exposure to small-cap, dividend-yielding US stocks.
As of February 28, 2022, VictoryShares US Small Cap High Div Volatility Wtd ETF’s (NASDAQ:CSB) annualized returns stand at 8.79%, closely tracking the Nasdaq Victory US Small Cap High Dividend 100 Volatility Weighted Index, which generated annual returns of 9.37% for the same period.
VictoryShares US Small Cap High Div Volatility Wtd ETF’s (NASDAQ:CSB) offers a gross expense ratio of 0.42%, and has a trailing twelve-month dividend yield of 3.17%. The fund’s portfolio is populated with 103 small-cap stocks, most of which are concentrated in the financials, industrials, and utilities segments. The fund has a top ten holdings concentration of 15.60% as of February 28, 2022.
4. iShares Core High Dividend ETF (NYSE:HDV)
The iShares Core High Dividend ETF (NYSE:HDV) tracks the performance results of the Morningstar Dividend Yield Focus Index, an index composed of relatively high dividend-paying U.S. equities. The fund uses a relative sampling technique to track these index’s investment results.
As of the end of February, 2022, the average annualized returns of the iShares Core High Dividend ETF (NYSE:HDV) came to 19.40%. This is compared to annualized 1-year returns of 19.49% for the Morningstar Dividend Yield Focus Index over the same period.
The iShares Core High Dividend ETF (NYSE:HDV) has a top ten holdings concentration of 55.29% as of February 28, 2022. The fund offers an attractive trailing twelve-month yield of 3.37%, and a budget-friendly expense ratio of 0.08%, which equals $8 annually per $10,000 invested.
The iShares Core High Dividend ETF (NYSE:HDV) holds positions in 81 public U.S. equities, of which the top 10 include Johnson & Johnson (NYSE:JNJ), The Coca-Cola Company (NYSE:KO), Chevron Corporation (NYSE:CVX), AbbVie Inc. (NYSE:ABBV) and Verizon Communications Inc. (NYSE:VZ).
3. WisdomTree U.S. High Dividend Fund (NYSE:DHS)
WisdomTree U.S. High Dividend ETF (NYSE:DHS) is an exchange-traded fund modeled after the WisdomTree U.S. High Dividend Index, which is a weighted index that measures the performance of companies that offer high dividend yields. The fund was founded in 2006 by WisdomTree Investments, Inc. and is co-managed by Mellon Investments Corporation.
As of February 28, 2022, WisdomTree U.S. High Dividend ETF’s (NYSE:DHS) average annualized returns equal 24.42%, which tracks closely to the WisdomTree U.S. High Dividend Index’s returns of 25.01% over the same period. The fund’s trailing twelve-month yield stands at 3.20%.
On February 23, 2022, WisdomTree U.S. High Dividend Fund (NYSE:DHS) declared a monthly distribution of $0.0450. The distribution was payable on February 25, 2022, to shareholders of record on February 23, 2022.
The top ten holdings concentration of WisdomTree U.S. High Dividend Fund (NYSE:DHS) as of the end of February 2022, is 44.29%. The fund’s holdings mostly comprised of companies that belonged to the healthcare, consumer defensive, energy, and financials sectors.
Exxon Mobil Corporation (NYSE:XOM), AbbVie Inc. (NYSE:ABBV), Chevron Corporation (NYSE:CVX), The Coca-Cola Company (NYSE:KO), and Verizon Communications Inc. (NYSE:VZ) were among the top 10 holdings of the WisdomTree U.S. High Dividend Fund (NYSE:DHS).
2. Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD)
Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) seeks to track the performance of the S&P 500 Low Volatility High Dividend Index, which is comprised of 51 stocks traded on the S&P 500 Index that have a history of delivering yields and low volatility. The fund’s trailing twelve-month yield is 3.42% and its gross expense ratio is 0.30%.
On February 22, 2022, Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) declared a monthly distribution of $0.1425, which was payable on February 28, to shareholders of record on February 23. The 30-day SEC yield of the ETF was 3.98% as of February 18, 2022.
At the end of February 2022, the annualized 1-year returns for Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) were reported to be 18.67%. This is compared to the S&P 500 Low Volatility High Dividend Index, which returned 19.05% as of February 28, 2022.
Some of the most notable holdings of the Invesco S&P 500 High Dividend Low Volatility ETF (NYSE:SPHD) are Chevron Corporation (NYSE:CVX), Altria Group, Inc. (NYSE:MO), and Verizon Communications Inc. (NYSE:VZ). The fund’s top ten holdings concentration as of February 28, 2022, was 27.59%.
1. Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY)
Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) mirrors and tracks the performance of the NASDAQ US Dividend Achievers 50 Index, which contains stocks that have high dividend yields and have consistent dividend growth. The ETF has a trailing twelve-month yield of 3.88% and a gross expense ratio of 0.53%.
This February, the Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) declared a monthly distribution of $0.0724, at which time the ETF had a 30-day SEC yield of 4.04%. The monthly distribution was payable on February 28, 2022, to shareholders of record on February 23, 2022.
As of February 28, 2022, the annualized 1-year returns for Invesco High Yield Equity Dividend Achievers ETF (NASDAQ:PEY) came out to 18.03%, closely tracking the NASDAQ US Dividend Achievers 50 Index, which returned 18.56% over the same period.
You can also take a look at 10 Best Dividend Stocks for Long Term and 10 Best Tech ETFs to Buy According to Reddit.
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Disclosure: None. 10 Dividend ETFs to Consider for Retirement is originally published on Insider Monkey.
