Therefore, investors keen on getting passive income or following a dividend-investing strategy could go for a dividend exchange-traded fund (ETF) as possibly a safer and better-diversified pick. Meanwhile, Morningstar, an American financial services firm, offered three dividends ETFs to keep on your watchlist.
Vanguard Dividend Appreciation ETF (NYSEARCA: VIG)
This ETF tracks the S&P U.S. Dividend Growers Index, holding 289 stocks that increase their dividend yield consistently year in and year out. Some of the larger holdings of the ETF include household names like Microsoft (NASDAQ: MSFT), Visa (NYSE: V), and Johnson & Johnson (NYSE: JNJ). Therefore, despite a smaller yield of 1.75%, the continuous compounding effect of increasing dividends makes it attractive. Year-to-date (YTD), the ETF is down over 15%, as the tech titans in the portfolio have taken a hit. Shares now trade below all daily Simple Moving Averages (SMAs), possibly offering a solid entry point, as the fund had 11.96% average annual returns over the past ten years.
Schwab US Dividend Equity ETF (NYSEARCA: SCHD)
On the whole, this ETF tracks the Dow Jones U.S. Dividend 100 Index, which focuses on high dividend yields and offers solid exposure to value stocks. Some of the notable holdings include Coca-Cola (NYSE: KO), Pfizer (NYSE: PFE), and International Business Machines (NYSE: IBM). YTD, the ETF is down over 11%, trading below all SMAs, possibly offering a solid entry position as the current price action was last seen in March of 2021. It seems as if the trading range oscillates between $69.90 and $73.90.
Vanguard International High Dividend Yield Index (NASDAQ: VYMI)
The final pick by Morningstar is an ETF that invests in public equity markets of the global ex-US region. The focus It maintains is stocks of companies operating across diversified sectors, belonging to the growth and value niches across diversified market capitalization. VYMI is down over 15% YTD, trading below all daily SMAs and touching the October 2020 lows. While having more risk than the other two ETFs, there is possibly a good entry point at the current price. Finally, the diversification offered by ETFs often can help survive volatile markets, as these ETFs hold a few dozen shares, maybe more than an average retail investor’s portfolio. While waiting out the storms on the market, concentrating on high yields and dividend payments may offer a source of income, and the following three ETFs may give some shelter. Buy stocks now with Interactive Broker – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
