What ETFs pay the best dividends?
Dividend-paying ETFs can be a great tool for those looking to increase cash flow and diversify their investments. They offer a simple solution to getting exposure to a specific investing niche — in this case, stocks that pay a regular dividend. You can use those dividends to pad your income as many retirees do.
Symbol | Name | Dividend Yield |
---|---|---|
NVDQ | T-Rex 2X Inverse NVIDIA Daily Target ETF | 47.99% |
OARK | YieldMax Innovation Option Income Strategy ETF | 39.94% |
CONY | YieldMax COIN Option Income Strategy ETF | 38.96% |
NVDS | AXS 1.25X NVDA Bear Daily ETF | 34.07% |
Dividend-paying ETFs can be a great tool for those looking to increase cash flow and diversify their investments. They offer a simple solution to getting exposure to a specific investing niche — in this case, stocks that pay a regular dividend. You can use those dividends to pad your income as many retirees do.
Symbol | Name | 5-Year Return |
---|---|---|
GBTC | Grayscale Bitcoin Trust | 67.03% |
USD | ProShares Ultra Semiconductors | 63.05% |
FNGU | MicroSectors FANG+™ Index 3X Leveraged ETN | 53.37% |
FNGO | MicroSectors FANG+ Index 2X Leveraged ETNs | 49.56% |
- Tata Consultancy Services Ltd. ...
- HDFC Bank Ltd. ...
- ICICI Bank Ltd. ...
- Hindustan Unilever Ltd. ...
- ITC Ltd. ...
- State Bank of India. ...
- Infosys Ltd. ...
- Housing Development Finance Corporation Ltd.
In fact, an ETF called the Global X NASDAQ 100 Covered Call ETF (NASDAQ:QYLD), launched in 2013, currently boasts an eye-catching yield of 12%. While the ETF holds appeal for income investors, there are also several things that investors should be aware of before jumping in right after seeing that eye-popping yield.
ETF | Assets Under Management | Expense Ratio |
---|---|---|
Invesco QQQ Trust (ticker: QQQ) | $240 billion | 0.2% |
Vanguard Information Technology ETF (VGT) | $71.7 billion | 0.1% |
Invesco AI and Next Gen Software ETF (IGPT) | $254 million | 0.6% |
MicroSectors FANG+ Index 3X Leveraged ETN (FNGU) | $3.3 billion | 0.95% |
Disadvantages. However, dividend ETFs are not without pitfalls. One of the tradeoffs for consistent income and lower risk is frequently a lower potential for growth. Companies that regularly pay out dividends tend to be more conservative in reinvesting profits for expansion.
Dividend ETFs and dividend stocks can both generate income and provide long-term growth for investors. However, they both carry similar degrees of market risk. Therefore, the choice of ETFs versus stocks comes down to an investor's personal preferences, investing goals and tolerance for risk.
However, there are disadvantages of ETFs. They come with fees, can stray from the value of their underlying asset, and (like any investment) come with risks. So it's important for any investor to understand the downside of ETFs.
What are the top 5 ETFs to buy?
Fund (ticker) | YTD performance | 5-year performance |
---|---|---|
Vanguard S&P 500 ETF (VOO) | 6.5 percent | 14.6 percent |
SPDR S&P 500 ETF Trust (SPY) | 6.5 percent | 14.6 percent |
iShares Core S&P 500 ETF (IVV) | 6.5 percent | 14.6 percent |
Invesco QQQ Trust (QQQ) | 6.3 percent | 21.1 percent |
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
Because of their wide array of holdings, ETFs provide the benefits of diversification, including lower risk and less volatility, which often makes a fund safer to own than an individual stock. An ETF's return depends on what it's invested in. An ETF's return is the weighted average of all its holdings.
- Coca-Cola (KO) Source: Coca-Cola. ...
- Chevron (CVX) Source: LesPalenik / Shutterstock.com. ...
- Schwab US Dividend Equity (SCHD) Source: iQoncept/shutterstock.com.
Ticker | Name | Dividend Safety |
---|---|---|
VZ | Verizon | Safe |
T | AT&T | Borderline Safe |
WHR | Whirlpool | Borderline Safe |
KMI | Kinder Morgan | Safe |
- Tata Consultancy Services Ltd. IT - Software.
- Infosys Ltd. IT - Software.
- Hindustan Unilever Ltd. FMCG.
- Reliance Industries Ltd. Refineries.
Buffett's favorite ETF
There are only two ETFs in Berkshire Hathaway's (NYSE: BRK. A) (NYSE: BRK.B) portfolio: the SPDR S&P 500 ETF Trust (NYSEMKT: SPY) and the Vanguard 500 Index Fund ETF (NYSEMKT: VOO). Both are index ETFs that track the S&P 500.
- Agree Realty Corp. (ADC)
- Ellington Financial Inc. (EFC)
- Gladstone Investment Corp. (GAIN)
- Modiv Industrial Inc. (MDV)
- LTC Properties Inc. (LTC)
- Realty Income Corp. (O)
- PermRock Royalty Trust (PRT)
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.
Symbol | Name | AUM |
---|---|---|
SPY | SPDR S&P 500 ETF Trust | $501,496,000.00 |
IVV | iShares Core S&P 500 ETF | $450,029,000.00 |
VOO | Vanguard S&P 500 ETF | $420,707,000.00 |
VTI | Vanguard Total Stock Market ETF | $380,695,000.00 |
What is better than ETF?
Consider Both ETFs and Mutual Funds
Owning both types of funds may be a smart strategy as each can offer protection and opportunity. For example, if you own a passively managed ETF, also buying an actively managed mutual fund may offer you some upside potential beyond that of the index being tracked.
Symbol | Name | Avg Daily Share Volume (3mo) |
---|---|---|
SPXU | ProShares UltraPro Short S&P500 | 27,874,479 |
TNA | Direxion Daily Small Cap Bull 3X Shares | 24,946,064 |
SPXS | Direxion Daily S&P 500 Bear 3X Shares | 24,175,125 |
GDX | VanEck Gold Miners ETF | 24,090,291 |
Here's a summary of which one to choose:
If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI. If you can't decide, consider simply buying both of them (assuming that commissions are low or free).
ETFs and index mutual funds tend to be generally more tax efficient than actively managed funds. And, in general, ETFs tend to be more tax efficient than index mutual funds. You want niche exposure. Specific ETFs focused on particular industries or commodities can give you exposure to market niches.
The average dividend yield on S&P 500 index companies that pay a dividend historically fluctuates somewhere between 2% and 5%, depending on market conditions. 7 In general, it pays to do your homework on stocks yielding more than 8% to find out what is truly going on with the company.
References
- https://seekingalpha.com/article/4669862-voo-at-all-time-highs-is-still-a-buy
- https://www.investopedia.com/articles/investing/120415/how-dividendpaying-etfs-work.asp
- https://www.schwab.com/learn/story/what-happens-if-your-etf-closes
- https://www.nerdwallet.com/article/investing/exchange-traded-fund-closure
- https://www.etf.com/sections/etf-basics/dividend-etf-vs-stocks
- https://www.investopedia.com/dividend-etf-vs-s-and-p-500-7968097
- https://www.smallcase.com/collections/highest-dividend-paying-stocks-in-india/
- https://www.cnbc.com/select/what-are-etfs-should-you-invest/
- https://www.investopedia.com/articles/investing/090115/7-best-etf-trading-strategies-beginners.asp
- https://finance.yahoo.com/news/genius-ways-1-000-month-105500970.html
- https://www.nasdaq.com/articles/3-evergreen-dividend-stock-champions-to-buy-now-and-hold-forever
- https://www.investopedia.com/articles/exchangetradedfunds/08/etf-taxes-introduction.asp
- https://etfdb.com/compare/dividend-yield/
- https://medium.com/@Levente22/7-ideas-to-make-1-000-2-500-per-month-in-passive-income-18da68d470e2
- https://www.investopedia.com/articles/investing/020916/etfs-can-be-safe-investments-if-used-correctly.asp
- https://wealthdesk.in/blog/are-etfs-good-for-long-term-investing/
- https://www.cnbc.com/2020/01/07/how-much-money-youd-have-if-you-invested-500-dollars-a-month-since-2009.html
- https://www.investopedia.com/articles/mutualfund/07/etf_downside.asp
- https://www.bankrate.com/investing/best-etfs/
- https://www.angelone.in/knowledge-center/mutual-funds/are-etfs-a-good-option-for-the-long-term
- https://www.fidelity.com/learning-center/investment-products/etf/benefits-of-etfs
- https://www.tipranks.com/etf/qqq/forecast
- https://www.nasdaq.com/articles/if-you-invested-$1000-in-sp-global-10-years-ago-this-is-how-much-youd-have-now
- https://money.usnews.com/funds/etfs/most-popular
- https://www.bankrate.com/investing/stocks-vs-etfs/
- https://www.investopedia.com/articles/etfs-mutual-funds/061416/biggest-etf-risks.asp
- https://www.experian.com/blogs/ask-experian/how-much-income-should-you-invest/
- https://investor.vanguard.com/investor-resources-education/taxes/how-mutual-funds-etfs-are-taxed
- https://www.investopedia.com/articles/exchangetradedfunds/11/advantages-disadvantages-etfs.asp
- https://www.investopedia.com/articles/investing/021916/etfs-vs-mutual-funds-which-better-young-investors.asp
- https://money.usnews.com/investing/articles/etfs-to-hedge-against-stock-market-crash
- https://finance.yahoo.com/news/12-yielding-etf-pays-large-163748797.html
- https://money.usnews.com/investing/articles/best-vanguard-etfs-to-buy
- https://money.usnews.com/investing/articles/best-etfs-to-buy
- https://www.fool.com/investing/how-to-invest/etfs/etfs-to-buy/
- https://finance.yahoo.com/news/warren-buffett-really-likes-1-110700418.html
- https://www.fidelity.com/learning-center/investment-products/etf/which-is-right-for-you
- https://www.investopedia.com/articles/basics/11/due-dilligence-on-dividends.asp
- https://www.fidelity.com/learning-center/investment-products/etf/tax-rules-for-losses-etfs
- https://fortune.com/recommends/investing/investing-during-a-recession/
- https://www.schwab.com/learn/story/etf-vs-mutual-fund-it-depends-on-your-strategy
- https://www.usatoday.com/money/blueprint/investing/best-growth-etfs/
- https://www.investopedia.com/ask/answers/052815/does-etf-pay-out-full-dividend-comes-stocks-held-etf.asp
- https://www.canstar.com.au/investor-hub/buy-sell-hold-etfs/
- https://www.nasdaq.com/articles/can-you-actually-retire-a-millionaire-with-etfs-alone-5
- https://www.etf.com/etf-education-center/etf-basics/what-risks-are-there-in-etfs
- https://www.investopedia.com/articles/exchangetradedfunds/08/etf-liquidity.asp
- https://www.fidelity.com/learning-center/investment-products/etf/dividends-on-etfs
- https://www.usatoday.com/money/blueprint/investing/best-high-dividend-etfs/
- https://www.indmoney.com/articles/top-5-stocks-to-invest
- https://lyonswealth.com/blog-details/how-much-money-do-i-need-to-invest-to-make-3000
- https://etfdb.com/compare/market-cap/
- https://www.fool.com/terms/l/leveraged-etfs/
- https://www.investopedia.com/articles/01/082901.asp
- https://www.fool.com/investing/how-to-invest/etfs/
- https://www.bankrate.com/investing/mutual-fund-vs-etf-which-is-better/
- https://www.fidelity.com/learning-center/investment-products/etf/drawbacks-of-etfs
- https://etfdb.com/compare/highest-5-year-returns/
- https://vericrestprivatewealth.com/leveraged-etf.php
- https://www.investopedia.com/financial-edge/0113/7-easy-to-understand-etfs-to-replace-a-savings-account.aspx
- https://stockanalysis.com/article/voo-vs-vti/
- https://www.fool.com/investing/general/2013/09/21/the-best-performing-stock-on-the-sp-500-since-1980.aspx
- https://www.investopedia.com/articles/stocks/09/buying-stock-or-etf.asp
- https://www.vanguard.com.au/personal/learn/smart-investing/etfs/etfs-how-to-get-started
- https://www.moneycontrol.com/mf/etf/
- https://www.simplysafedividends.com/world-of-dividends/posts/3-top-25-high-dividend-stocks-yielding-4-to-10
- https://www.investopedia.com/articles/exchangetradedfunds/11/building-an-etf-portfolio.asp
- https://www.fool.com/investing/how-to-invest/index-funds/safest-index-funds/
- https://www.fidelity.com/learning-center/investment-products/etf/risks-with-etfs
- https://www.nerdwallet.com/article/investing/high-dividend-etfs
- https://www.investopedia.com/why-bond-etfs-go-down-8303231
- https://curvo.eu/article/etf-risk
- https://www.titan.com/articles/etf-drawbacks
- https://money.usnews.com/investing/articles/best-etfs-to-buy-for-long-term-investors
- https://www.trackinsight.com/en/education/what-happens-if-etf-shuts-down
- https://www.trackinsight.com/en/education/how-many-etfs-should-you-own
- https://www.forbes.com/advisor/investing/best-fidelity-etfs/
- https://investor.vanguard.com/investor-resources-education/retirement/income-make-the-most-of-retirement
- https://etfdb.com/compare/volume/
- https://www.etfcentral.com/etf-u/guides/etfs-vs-stocks
- https://www.investopedia.com/articles/exchangetradedfunds/09/etf-out-of-business.asp
- https://www.getsmarteraboutmoney.ca/learning-path/etfs/how-exchange-traded-funds-etfs-work/
- https://money.usnews.com/investing/articles/best-monthly-dividend-stocks-to-buy-now
- https://www.investopedia.com/articles/investing/121515/why-3x-etfs-are-riskier-you-think.asp
- https://www.nerdwallet.com/article/investing/sp-500-etfs
- https://www.etfcentral.com/etf-u/guides/how-many-etfs-should-i-own
- https://www.investopedia.com/terms/f/four-percent-rule.asp