Top-3 ETFs for Dividends

Financeritual
Fri, 10 Jul 2020 02:25:04 +0000
Markets, dividents, ETFs, exchange-traded funds

It is a must for all well-rounded investment portfolios to have great exposure to the stock market. However, picking individual stocks isn’t the best option. It requires analytical skills; it’s time-consuming and risky, as your portfolio’s performance depends on how certain companies are doing, and not the stock market itself. If you don’t want to deal with all that, we’ve got a perfect solution for you – invest in exchange-traded funds (ETFs)!

In our opinion, Vanguard offers some of the most lucrative funds; this company was among the first to develop the concept of low-cost index fund investing. This is why the Vanguard S&P 500 ETF (NYSEMKT:VOO), the Vanguard High Dividend Yield ETF (NYSEMKT:VYM), and the Vanguard Real Estate ETF (NYSEMKT:VNQ), are excellent choices for investors. Read on to learn more!

High dividends from trustworthy companies

If you care about dividends, but at the same time you want to invest long-term with growth potential, check out the Vanguard High Dividend Yield ETF. It tracks an index of about 400 stocks, and each of them pays above-average dividends. Also, in this fund, market capitalization is taken into account, which means that the larger the company is, the bigger role it plays. The holdings include JPMorgan Chase (NYSE: JPM), Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), and so on.

Since this ETF focuses on entities with above-average dividends, it pays 3.9%, which is about twice the yield of the S&P 500. And that’s with a 0.06% expense ratio! All in all, a great deal.

Real estate’s potential growth

Real estate investment trusts (REITs) are a great long-term investment if you’re interested in both growth and income. REITs are obliged to pay out about 90% of taxable income to their shareholders, which is why they usually have high dividend yields. What is more, real estate values tend to increase with time, so, as a rule, long-term growth is there.

If selecting individual REITs is too overwhelming, choose the Vanguard Real Estate ETF to get exposure to a diverse index of real estate investment trusts in your portfolio. Real estate was affected a lot by the COVID-19, so it could be a great time to start.

Warren Buffett’s favorite investment

Despite the fact that it’s not a dividend-focused ETF, the S&P 500 has been showing great results in both income and growth so far. That’s why a solid S&P 500 ETF can be a great core of your portfolio.

Warren Buffett has mentioned more than once that this fund is the best investment for the majority of Americans. He has also talked about Vanguard because of its low-fee approach (0.03% expense ratio!). An investment in the overall S&P 500 is essentially a bet on American business on the whole; it has performed well so far, and it’s likely to keep the same.