If it’s strong income and growth you’re after, you may want to consider dividend-paying exchange-traded funds (ETFs), especially those that focus on paying consistent or growing dividend yields. All of which can help provide you with passive, regular income.
We can consider high-yield dividend funds, which target companies with above-average yields in high-growth sectors such as consumer staples and telecommunications. We can also consider dividend growth funds, which focus on companies with a history of consistently increasing their dividends over time, such as Dividend Kings and Dividend Aristocrats.
In fact, here are five of the top ETFs that fit the mold.
Schwab US Dividend Equity ETF
There’s the Schwab US Dividend Equity ETF (NYSEARCA: SCHD).
With an expense ratio of 0.06%, the ETF tracks the total return of the Dow Jones U.S. Dividend Index. It also yields 3.93%, and has holdings in Amgen, AbbVie, Home Depot, Cisco Systems, Broadcom, Chevron, UPS, and Coca-Cola, to name just a few.
The ETF includes a total of 103 dividend stocks.
The SCHD ETF just paid a dividend of just over 26 cents on June 30. Before that, it paid a dividend of just over 24 cents on March 31. Also, since bottoming out at around $23.75 in April, the ETF is now up to $27.50. From here, we’d like to see it initially retest $28.75.
Vanguard Dividend Appreciation Index Fund ETF
With an expense ratio of 0.05% and a yield of 1.59%, the Vanguard Dividend Appreciation Index Fund ETF (NYSE: VIG) tracks the performance of the S&P U.S. Dividend Growers Index.
Some of its 337 holdings include Broadcom, Microsoft, JPMorgan Chase, Apple, and Eli Lilly. Just over 26% of its portfolio is invested in information technology stocks. About 22.6% is invested in financials. And about 15% is invested in health care stocks.
The ETF also just paid out a dividend of just over 86 cents on October 1. Before that, it paid out a dividend of just over 87 cents on July 2. Since bottoming out at around $170 in April, the ETF is now up to $217.27. From here, we’d like to see it rally to $230 initially.
iShares Core Dividend Growth ETF
We can also take a look at the iShares Core Dividend Growth ETF (NYSEARCA: DGRO).
With an expense ratio of 0.08% and a yield of about 2.2%, the DGRO ETF offers low-cost exposure to U.S. stocks focused on dividend growth. Some of its top holdings are in Apple. Microsoft, Johnson & Johnson, Exxon Mobil, Broadcom, and AbbVie. About 20% of its holdings are in financial stocks. About 18% is invested in information technology. And just over 17.5% of its portfolio is invested in healthcare stocks.
DRGO also just paid a dividend of just over 36 cents on September 19. Before that, it paid out a dividend of just over 32 cents on June 20.
Also, since bottoming out at around $54 in April, the DGRO ETF is now up to $68.47. From here, we’d like to see it test $75 a share.
Vanguard High Dividend Yield ETF
With an expense ratio of 0.06% and a yield of 2.45%, the Vanguard High Dividend Yield ETF (NYSE: VYM) tracks the performance of the FTSE High Dividend Yield Index.
Some of its 579 holdings include Broadcom, JPMorgan Chase, Exxon Mobil, Johnson & Johnson, and Walmart. About 21.7% of its portfolio is invested in financials. About 13.2% is invested in industrials. The ETF also just paid out a dividend of just over 84 cents on September 23. Before that, it paid out a dividend of just over 86 cents on June 24.
Since bottoming out at around $112 in April, the ETF is now up to $140.88. From here, we’d like to see the VYM ETF rally to $150 initially.
SPDR S&P Dividend ETF
There’s also the SPDR S&P Dividend ETF (NYSEARCA: SDY).
With an expense ratio of 0.35% and a yield of 2.54%, the SDY ETF seeks to provide results similar to the total return of the S&P High Yield Dividend Aristocrats – companies that have increased their dividends for at least 20 consecutive years.
Some of its top holdings include Verizon, Realty Income, Chevron, AbbVie, Target, and Exxon Mobil, to name a few of its 149 holdings.
About 19.3% of SDY’s portfolio is invested in industrials. About 16.55% is invested in consumer staples. And about 15.86% is invested in utility stocks. It also just paid a dividend of 87 cents per share on September 24. Before that, it paid out a dividend of 93 cents on June 25.
Also, since bottoming out at around $110 in April, the SDY ETF rallied to a high of $140.19. From here, we’d like to see it challenge $150 near term.
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