Investors looking to not only grow their nest egg for retirement, but also generate significant (and hopefully growing) passive income streams to live off of in retirement, have a number of excellent options to choose from. Of course, there’s always bonds, real estate rental properties, and businesses that can provide such cash flow over the long-term (with capital appreciation upside). But equity exposure remains high as a percentage of most retirees’ overall portfolios, so tilting one’s portfolio more toward dividend paying stocks can be a winning strategy.
In this article, I’m going to highlight three Fidelity ETFs I think could provide the kind of market-beating income (and upside) such investors are looking for. Without further ado, let’s dive in!
Fidelity Blue Chip Growth ETF (FBCG)
The Fidelity Blue Chip Growth ETF (FBCG) is among the best options in the market for investors looking for proven long-term growth from solid blue-chip companies. As its name suggests, FBCG invests in only the largest U.S. stocks that display strong earnings growth and have rock solid balance sheets. What that means is that those worried about significant market downturns can sleep a little easier at night. And that’s worth something.
Now, investors need to pay up for this service. That’s because this ETF is actively managed, meaning there’s a fund manager picking who he or she thinks will be the winners and losers among the dividend-paying blue-chip stocks in the S&P 500. Currently, this ETF has an expense ratio of 0.59%, which to be honest is on the higher end of the spectrum and a bit higher than I’d like to pay.
That said, I think the ETF’s tech, consumer discretionary, and healthcare exposure provides a nice mix of defensiveness and long-term growth potential. With roughly $5 billion in net asset value, this is a large-cap ETF filled with the best large-cap stocks I think long-term investors can buy and forget about for a long time.
Fidelity Hight Dividend ETF (FDVV)
For investors looking for a bit more income, the Fidelity High Dividend ETF (FDVV) is one ETF I think is certainly worth considering right now. In fact, this is an ETF I’ve featured in other pieces for investors looking for dividend income, and that’s because there are truly fewer better options for investors seeking the right mix of yield at the right cost. With an expense ratio of 0.16% and a dividend yield of 3.1%, this is among the more reasonably priced dividend ETFs.
Indeed, any ETF that can provide a net dividend yield around 3% is solid in this market. Of course, there are money market funds that will pay a higher yield. But for those who think interest rates are likely on the way down, the upside of the holdings within FDVV’s portfolio could be significant. And locking in these yields today means that any sort of dip in the market would provide even higher yields investors can leg into.
Thus, for those with more capital to put to work in the years and decades to come, this is a top ETF I’d consider dollar cost averaging into. It’s never too late to start, and in this case, I’m thinking of starting right now.
Fidelity International High Dividend ETF (FIDI)
In this current market environment, I continue to pound the table on the idea that geographic diversification matters, perhaps more than in a long time. Indeed, U.S. equities have outperformed their global counterparts for some time. But for investors who think there’s a chance this trend reverses course in the coming years, the Fidelity International High Dividend ETF (FIDI) is a great option to consider.
What I like most about this ETF is its overall yield. Currently yielding 4.45% (with a 0.19% expense ratio), investors can clear more than 4.2% in net yield by adding exposure to this international dividend ETF right now.
What’s interesting is that the U.S. and Canadian markets are unique in the relatively low yields companies provide in these markets (partly due to where valuations are right now). Thus, by investing in FIDI or a similar fund, investors not only get more up front yield today, but greater portfolio diversification and a group of stocks that are valued much more attractively. What’s not to like?
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