A basket of dividend ETFs can provide passive income for life and low stress.
The first five ETFs offer higher returns from a mix of stocks, real estate and bonds.
The second group aims to complement the first, making the portfolio diverse and resilient.
10 Stocks We Like More Than the Schwab US Dividend Equity ETF ›
If you are interested in the idea of making money while you sleep, congratulations! You can enjoy the dividends. However, you don’t need to browse through tons of dividend stocks to build a solid income-generating portfolio. Instead, consider using exchange-traded funds (ETFs) to build a diversified dividend portfolio without breaking a sweat.
Here are five fantastic ETFs that offer high dividend yields to really boost your passive income. Then consider five more outstanding dividend-paying ETFs to add as add-ons. Together, these ETFs can make a great portfolio that will pay you until you sleep well at night.
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To get started, Schwab US Dividend Equity ETF(NYSEMKT: SCHD) is a fantastic comprehensive high yield ETF that focuses on blue chip dividend stocks Dow Jones US Dividend 10 Index. The ETF currently has a yield of 3.8% and a very modest expense ratio of 0.06%.
With just 8.3% exposure to tech stocks, this ETF is a great way to avoid the potential volatility that has seeped into the broader stock market during the artificial intelligence (AI) boom. Instead, the ETF emphasizes other market sectors, headlined by energy, consumer staples and healthcare.
Investing in Treasury bonds can generate passive income while diversifying outside of the stock market. The iShares 20+ Year Treasury Bond ETF(NASDAQ: TLT ) holds US Treasury bonds with maturities greater than 20 years.
The ETF has a trailing 12-month return of just under 4.3% and an expense ratio of 0.15%. Treasuries are a traditional alternative to stocks, widely seen as a safe haven for riskier assets. But interest rate fluctuations affect bond prices, so even this ETF isn’t immune to the volatility that stocks are known for.
The Pacer Global Cash Cows Dividend ETF.(NYSEMKT:GCOW) follows an investment strategy focused on stocks with high free cash flow and high dividend yields. This focus on cash cow stocks inspired the name of the ETF. The fund currently yields just over 4% and has an expense ratio of 0.6%.
This ETF focuses on mature industries where companies often don’t have rapid growth but still generate juicy profits that fund generous dividends. This means a strong focus on healthcare, energy and consumers. It also includes both US and international stocks, adding another element of diversification.
The S&P 500 is a famous index of 500 famous US companies. The SPDR Portfolio S&P 500 High Dividend ETF(NYSEMKT: SPYD) drills into the S&P 500 and invests in the 80 stocks with the highest dividend yields. As a result, the ETF offers a solid yield of 4.6% with an expense ratio of just 0.07%.
This ETF gives investors significant exposure to real estate and utilities, two sectors that are often overlooked. While they make up less than 5% of the S&P 500, they make up roughly 35% of this fund. This makes it a great way to add to your portfolio.
Real estate is a timeless asset. However, as you saw above, it has minimal representation in the S&P 500 Vanguard Real Estate ETF(NYSEMKT:VNQ) invests in more than 150 individual real estate investment trusts (REITs), companies that buy and lease real estate.
ETF REIT holdings cover a variety of industries, giving investors a good mix of real estate investments using just one symbol. ETFs are also great for the passive income they generate. Its current yield is just over 3.5%, and the fund carries a reasonable expense ratio of just 0.13%.
The Vanguard High Dividend Yield ETF(NYSEMKT: VYM) looking for notable large-cap stocks with high yields. The ETF currently holds 566 stocks, led by financials, technology, industrials and healthcare. The ETF yields a solid 2.4% and has a very low expense ratio of just 0.06%.
The Vanguard International High Dividend Yield ETF(NASDAQ: VYMI) invests in high-quality non-US stocks with higher dividend yields. The ETF has more than 1,500 names, with no single stock accounting for more than 1.56% of the fund. International stocks are an essential component of a diversified portfolio, and this ETF makes it very easy to invest in non-US companies.
The Vanguard Dividend Appreciation ETF(NYSEMKT: VIG) reduces yield and accelerates growth. It yields only 1.6%, but focuses more on faster growing companies and industries. That’s why technology and financials make up nearly half of this ETF, and some stocks in the Magnificent Seven are among its biggest holdings. With a low expense ratio of 0.05%, this ETF is a solid way to grow your dividend portfolio.
Image source: Getty Images.
The iShares Core Dividend Growth ETF(NYSEMKT: DGRO) offers a similar growth focus. It highlights companies that consistently increase their dividends. It also offers a bit more leverage, with double-digit weightings in financials, technology, healthcare, consumer staples and industrials. The ETF currently yields just over 2% and has a low expense ratio of 0.08%.
The CGDV Capital Group Dividend Value ETF(NYSEMKT:CGDV) completes the batch. He invests with a simple goal: to outperform the average dividend yield of US stocks. This represents a current yield of 1.4% and a reasonable expense ratio of 0.33%. The companies in this ETF are typically mature large-cap stocks with the highest exposure to the technology, industrials, healthcare and consumer discretionary market sectors.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends the Vanguard Dividend Appreciation ETF, the Vanguard Real Estate ETF, and the Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF. The Motley Fool has a disclosure policy.
5 High-Yield Dividend ETFs to Buy for Passive Income and 5 Other Compelling Dividend ETFs were also originally published on The Motley Fool
