At various stages of life, we can have different financial goals and this will mean owning different exchange traded funds (ETFs). To that end, when we’re at or near retirement, it’s a good time to consider ETFs that provide consistent income and pay frequently.
Three funds that check all the right boxes are the Amplify CWP Enhanced Dividend Income ETF (NYSEARCA:DIVO), the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD), and the iShares Preferred and Income Securities ETF (NASDAQ:PFF). These ETFs send you a virtual check every month in the form of cash distributions, and they’re all diversified funds that require no stock picking.
Since you’ll get paid cash on a monthly basis, you’ll be able to boost your retirement income potential by reinvesting the dividends. Furthermore, for extra diversification, you could buy two or even all three of these ETFs. With that in mind, let’s take a closer look at DIVO, SPHD, and PFF right now.
DIVO: Less Volatility With High-Quality Names
Some folks say that volatility brings opportunity, but when you’re a retirement investor, you’re probably looking to reduce your drawdowns. As it turns out, the Amplify CWP Enhanced Dividend Income ETF is ideal for retirees seeking to mitigate their risk.
How does the DIVO ETF reduce risk? First of all, it only imposes a 0.56% expense ratio (i.e., annual management fees that are automatically deducted from the share price). That’s a reasonable price to pay for the management of this diversified fund.
Speaking of diversification, the Amplify CWP Enhanced Dividend Income ETF includes 36 stocks in its holdings. A retiree probably doesn’t want to spend a lot of time picking out individual stocks, so buying DIVO can make this task unnecessary.
Most importantly, the Amplify CWP Enhanced Dividend Income ETF attempts to reduce share-price volatility by investing in reliable, high-quality names. You’ll surely recognize many of the stocks in DIVO’s holdings, such as Apple (NASDAQ:AAPL), American Express (NYSE:AXP), Home Depot (NYSE:HD), and Goldman Sachs (NYSE:GS).
With a distribution rate (i.e., expected annual yield) of 4.82%, reasonable management fees, and monthly cash payouts, the Amplify CWP Enhanced Dividend Income ETF is a great pick for retirement investors. Yet, you might want to diversify your portfolio beyond the 36 stocks contained within the DIVO ETF. To achieve this, you might consider adding the next two funds, SPHD and PFF.
SPHD: S&P 500 Exposure With Lower Fees
Next up, we’re featuring the Invesco S&P 500 High Dividend Low Volatility ETF, which basically sums up the fund in its name. It invests in some stocks from the famous S&P 500 large-cap index, with a focus on high dividend yield and reduced share-price volatility.
Like the other ETFs on this list, the Invesco S&P 500 High Dividend Low Volatility ETF will pay you cash distributions on a monthly basis. Currently, SPHD’s distribution rate is 4.41%, so this fund can help you grow your retirement portfolio over time.
Regarding the management expenses, the Invesco S&P 500 High Dividend Low Volatility ETF deducts an expense ratio of 0.3%, which is comparatively low. That way, your account won’t get hit too hard by the fund’s annual fees.
On the topic of diversification, the Invesco S&P 500 High Dividend Low Volatility ETF includes 51 stocks in its holdings list. You can rest assured with SPHD when you’re invested in well-known S&P 500 stocks like Verizon Communications (NYSE:VZ), Realty Income Corp. (NYSE:O), Pfizer (NYSE:PFE), and Altria Group (NYSE:MO).
Between DIVO and SPHD, you’ll get plenty of exposure to top-tier large-cap stocks. To expand even further and achieve a perfect retirement ETF trifecta, we can explore the ins and outs of the PFF ETF.
PFF: Hundreds of Stocks in One Fund
Now it’s time to take diversification to a whole other level. Impressively, the iShares Preferred and Income Securities ETF has a 449-member holdings list.
The idea behind the PFF ETF is to provide exposure to “U.S. preferred stocks, which have characteristics of bonds (pay a fixed dividend) and stocks (represent ownership in a company).” The lengthy holdings list of the iShares Preferred and Income Securities ETF includes blue-chip names like Bank of America (NYSE:BAC), AT&T (NYSE:T), Ford (NYSE:F), and Allstate (NYSE:ALL).
The iShares Preferred and Income Securities ETF charges an annualized expense ratio of 0.45%, which isn’t out of line. You should get that back and more in the form of monthly payouts as PFF features an eye-catching 6.5% annual yield.
Truly, you’ll get “preferred” treatment as an owner of the iShares Preferred and Income Securities ETF. Yet, you don’t have to rely on only one fund for monthly retirement income. Instead, you can combine PFF with DIVO and SPHD to get the benefits of all three low-fee, risk-reduced funds featuring a slew of established large-cap stocks.
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