Earning passive income is a way of life, and you can build life-changing wealth over time with carefully selected exchange traded funds (ETFs). Today, we’re exploring a pair of ETFs from Fidelity with different features and advantages for smart-money investors.
These Fidelity funds are ideal for retirement income, but you can buy them at practically any stage of life. So, let’s jump right in and get the lowdown on two standout ETFs that put cash in your account every three months.
Capture High Yield With FDVV
Bigger quarterly distributions can really add up over time. For serious yield hunters, the Fidelity High Dividend ETF (NYSEARCA:FDVV) is a terrific pick in 2025.
First and foremost, the FDVV features a trailing 12-month distribution yield of 3.1%. That’s not a guarantee of the fund’s future yield, but the Fidelity High Dividend ETF has been consistent in rewarding its loyal shareholders over the long term.
Granted, there are management expenses automatically deducted from FDVV’s share price. However, the Fidelity High Dividend ETF’s annualized expense ratio is quite low at just 0.16%; this would equate to just $1.60 per year for every $1,000 invested in the fund.
Currently, the FDVV ETF includes 109 stocks in its holdings list, so there’s a decent amount of diversification here. By weighting, the Fidelity High Dividend ETF’s top four holdings are NVIDIA (NASDAQ:NVDA) (6.31% of the fund’s weighting), Microsoft (NASDAQ:MSFT) (5.56%), Apple (NASDAQ:AAPL) (5.08%), and JPMorgan Chase (NYSE:JPM) (2.72%).
While the Fidelity High Dividend ETF isn’t extremely aggressive, not everyone will feel comfortable allocating heavily into NVIDIA stock. That’s because NVIDIA is a relatively recent market darling with a valuation that expanded rapidly during the past few years.
If the over-weighting of NVIDIA stock is a deal breaker for you, then you don’t have to buy the Fidelity High Dividend ETF. Right now, I’ll show you a Fidelity fund with less NVIDIA exposure.
Put Safety First With FDLO
At first glance, the Fidelity Low Volatility Factor ETF (NYSEARCA:FDLO) might seem very similar to the FDVV ETF. Both of these Fidelity ETFs have annualized expense ratios of 0.16%, and they both distribute cash dividend payments on a quarterly basis.
However, with a closer look, we can discern crucial differences between the two funds. To start off, in contrast to FDVV’s 109 stocks, the Fidelity Low Volatility Factor ETF has a holdings list that includes 128 stocks. Consequently, you might achieve broader diversification with the FDLO ETF.
Next, you’ll notice a difference in the four top-weighted holdings of the Fidelity Low Volatility Factor ETF. These are Microsoft (7.29% of the fund’s weighting), Apple (6.99%), Alphabet (NASDAQ:GOOGL) (4%), and Amazon (NASDAQ:AMZN) (3.96%).
Less reliance on NVIDIA stock, and a heavier emphasis on Microsoft stock and Apple stock, might put some investors at ease. That’s because, in the universe of technology stocks, Microsoft and Apple are long-established, relatively stable, and not the high flyer that NVIDIA stock has been lately.
The main trade-off is that the Fidelity Low Volatility Factor ETF only features a trailing 12-month distribution yield of 1.4%. That’s a far cry from the eye-catching 3.1% yield of the Fidelity High Dividend ETF.
FDVV and FDLO: A Balanced Approach
While the passive income community may be divided over the yield-versus-safety debate, this doesn’t have to be an either-or proposition. Indeed, investors of all stripes can benefit from both of the Fidelity funds featured today.
Since the the Fidelity High Dividend ETF is comparatively less diversified and is heavily reliant on NVIDIA stock, some investors may consider it to be higher-risk. Thus, it could make sense to just purchase a small share position in FDVV.
Then, it’s possible to buy a slightly higher number of Fidelity Low Volatility Factor ETF shares. This shouldn’t bother risk-averse investors as FDLO is more diversified and will probably not be highly volatile.
The net effect, then, is that you can benefit from the higher yield of the Fidelity High Dividend ETF and the safety anchor of the Fidelity Low Volatility Factor ETF. It’s mainly just a matter of deciding how many shares of each fund you’d like to own.
And there you have it: a balanced approach to buying two fabulous Fidelity funds this year. The yield-versus-safety debate will undoubtedly continue, but despite the differences between the two ETFs, you can still set a sensible course for long-term passive income with FDVV and FDLO.
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