If You Have $5,000, Buy These ETFs for Lifetime Passive Income

Buying ETFs takes out most of the complexity around building a stock portfolio. You can find funds that align with your financial goals and risk tolerance. Some people look for high-yield ETFs that provide an extra income source. These funds are useful for retirees or people who want some extra help with covering their expenses. If you want low-volatility ETFs that deliver passive income, these ares eom of the top funds to consider.

Schwab US Dividend Equity ETF (SCHD)

The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) features many high-yield stocks and provides a 3.87% yield over the past 12 months. The fund also has a low 0.06% expense ratio which allows you to keep most of your gains.

Not only does the fund have a high yield, but it has also produced respectable long-term returns. The ETF has an annualized 13.6% return over the past five years and an annualized 11.5% return over the past decade. SCHD has gotten those returns while having a relatively low volatility. It’s not likely to beat benchmarks like the S&P 500 and Nasdaq Composite during bull markets, but it won’t fall as much during bear markets.

SCHD has 100 holdings and prioritizes the energy sector, which makes up almost 20% of the fund’s total assets. There are five additional sectors that each make up more than 10% of SCHD’s total equity positions.

Vanguard High Yield Dividend Index Fund ETF (VYM)

The Vanguard High Yield Dividend Index Fund ETF (NYSEARCA:VYM) holds dividend stocks that hike their dividends at higher rates than the average dividend stock. Although it’s a dividend growth stock fund, VYM manages to offer a 2.65% trailing 12-month yield. It’s also delivered an annualized 14.9% return over the past five years. That gains have held steady at an annualized 10.6% rate over the past decade. The fund only has a 0.06% expense ratio, so you will keep most of the profits.

A closer inspection of the fund reveals how it can have a solid yield and a lengthy history of double-digit annualized returns. The fund’s top holding is Broadcom (NASDAQ:AVGO), which has soared by more than 700% over the past five years. Its second largest holding, JPMorgan (NYSE:JPM), has more than tripled over the past five years. These two stocks make up roughly 10% of the fund’s total assets, and VYM’s top 10 holdings make up 25% of its total assets.

VYM holds 585 stocks, with a large focus on financials, tech, and consumer staples. Most of the stocks have large market caps.

Fidelity High Dividend ETF (FDVV)

The Fidelity High Dividend ETF (NYSEARCA:FDVV) has a 0.16% expense ratio and a 3.16% trailing 12-month yield. The high yield comes with a 18.3% annualized return over the past five years, which puts it on par with the S&P 500.

The high returns also come with relatively low volatility and a strong focus on large-cap stocks. Roughly 70% of the fund’s total assets are in large-caps, with tech and financial stocks doing the bulk of the lifting.

FDVV has more than 100 stocks, including three Magnificent Seven stocks to lead its top 10 list. The fund isn’t too top-heavy, with only 25% of its assets allocated toward its top 10 positions.