What is the best long-term dividend ETF?
Our recommendation for the best overall dividend ETF is the Schwab U.S. Dividend ETF (SCHD), thanks to a combination of high Morningstar rating, rigorous index methodology, low expense ratio, competitive yields and strong historical performance.
Our recommendation for the best overall dividend ETF is the Schwab U.S. Dividend ETF (SCHD), thanks to a combination of high Morningstar rating, rigorous index methodology, low expense ratio, competitive yields and strong historical performance.
- 6 Best Monthly Dividend ETFs. ...
- JPMorgan Equity Premium Income Fund JEPI -0.2% ...
- JPMorgan NASDAQ Equity Premium Income Fund (JEPQ) ...
- Invesco S&P 500 Low Volatility ETF SPLV -0.7% ...
- WisdomTree U.S. LargeCap Dividend Fund DLN -0.4%
SCHD price and total return (including dividends) has outperformed VYM over a ten-year investment horizon (see chart below). Past performance is not indicative of future returns. VYM is better diversified, while SCHD has more holdings concentration risk. VYM has four times as many holdings as SCHD.
| Stock | Dividend yield | Dividend growth streak |
|---|---|---|
| Procter & Gamble Co. (PG) | 2.4% | 68 years |
| 3M Co. (MMM) | 6.5% | 65 years |
| Coca-Cola Co. (KO) | 3.3% | 61 years |
| Johnson & Johnson (JNJ) | 3.2% | 61 years |
Cons. No guarantee of future dividends. Stock price declines may offset yield. Dividends are taxed in the year they are distributed to shareholders.
ETF issuers collect any dividends paid by the companies whose stocks are held in the fund, and they then pay those dividends to their shareholders. They may pay the money directly to the shareholders, or reinvest it in the fund.
| Symbol | Name | Dividend Yield |
|---|---|---|
| QRMI | Global X NASDAQ 100 Risk Managed Income ETF | 12.06% |
| PEX | ProShares Global Listed Private Equity ETF | 12.00% |
| TYLG | Global X Information Technology Covered Call & Growth ETF | 11.86% |
| SDIV | Global X SuperDividend ETF | 11.80% |
Dividend ETFs are passively managed, meaning the fund manager follows an index and does not have to make trading decisions often. Dividend ETFs are good investment options for investors that are risk-averse and income-seeking.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at.
Why is SCHD so popular?
SCHD provides broad diversification into quality dividend growth stocks without the need for individual stock picking. It has a reasonable portfolio weighted-average PE ratio, pays a meaningful yield, and is well-diversified across sectors, making it an attractive option for investors seeking income and growth.
SCHD - Volatility Comparison. The current volatility for JPMorgan Equity Premium Income ETF (JEPI) is 1.89%, while Schwab US Dividend Equity ETF (SCHD) has a volatility of 3.52%. This indicates that JEPI experiences smaller price fluctuations and is considered to be less risky than SCHD based on this measure.
| Symbol Symbol | ETF Name ETF Name | % In Top 10 % In Top 10 |
|---|---|---|
| VIG | Vanguard Dividend Appreciation ETF | 32.12% |
| VYM | Vanguard High Dividend Yield Index ETF | 26.25% |
| VYMI | Vanguard International High Dividend Yield ETF | 14.46% |
| VIGI | Vanguard International Dividend Appreciation ETF | 34.27% |
| Stock | Dividend yield |
|---|---|
| Verizon Communications Inc. (VZ) | 6.7% |
| Mid-America Apartment Communities Inc. (MAA) | 4.5% |
| Grupo Aeroportuario del Pacifico SAB de CV (PAC) | 5.7% |
| United Micro Electronics (UMC) | 7.0% |
| Stock | Trailing annual dividend yield* |
|---|---|
| Boston Properties Inc. (BXP) | 6.2% |
| Kinder Morgan Inc. (KMI) | 6.2% |
| AT&T Inc. (T) | 6.3% |
| Verizon Communications Inc. (VZ) | 6.3% |
Some of the greatest dividend stocks on Earth are brand-name, time-tested companies that have been increasing their payouts for decades. Perfect examples include Johnson & Johnson (NYSE: JNJ) and Coca-Cola (NYSE: KO), which have each increased their base annual payouts for 61 consecutive years.
Risk: While dividend ETFs provide greater diversification and may be less risky than individual stocks, they are still subject to market risk and can experience declines in value.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Over time, the cash flow generated by those dividend payments can supplement your Social Security and pension income. Perhaps, it can even provide all the money you need to maintain your preretirement lifestyle. It is possible to live off dividends if you do a little planning.
Moreover, the investor must own the shares in the ETF paying the dividend for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. This means if you actively trade ETFs, you probably can't meet this holding requirement.
What is the best ETF to buy right now?
- ProShares Bitcoin Strategy ETF (BITO)
- Invesco QQQ Trust (QQQ)
- Vanguard Information Technology ETF (VGT)
- VanEck Semiconductor ETF (SMH)
- Invesco S&P MidCap Momentum ETF (XMMO)
- SPDR S&P Homebuilders ETF (XHB)
- Invesco S&P 500 GARP ETF (SPGP)
FTEC is managed by Fidelity, while SCHD is managed by Schwab. Both FTEC and SCHD are considered high-volume assets. They're less likely to be affected by issues like slippage and failed orders on Composer than low-volume assets.
| Exchange-traded fund (ticker) | Assets under management | Expenses |
|---|---|---|
| Vanguard Dividend Appreciation ETF (VIG) | $78.2 billion | 0.06% |
| Vanguard U.S. Quality Factor ETF (VFQY) | $324.3 million | 0.13% |
| SPDR Gold MiniShares (GLDM) | $6.8 billion | 0.10% |
| iShares 1-3 Year Treasury Bond ETF (SHY) | $24.8 billion | 0.15% |
| Symbol | ETF Name | 10y Chg 4-2-24 |
|---|---|---|
| SOXX | iShares Semiconductor ETF | 873% |
| PSI | Invesco Semiconductors ETF | 786% |
| META | Roundhill Ball Metaverse ETF | 717% |
| XSD | SPDR S&P Semiconductor ETF | 617% |
Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation.
