6 high dividend ETF funds you can invest in

6 high dividend ETF funds you can invest in

Before you search for the best dividend exchange-traded funds (ETFs), it is recommended you understand your needs and overall investment objectives. ETFs are hybrids of mutual funds and stocks. When you invest in the ETF, you purchase shares in the fund, which buys the underlying asset.

Here are six of the best high-dividend ETF funds:

Vanguard High Dividend Yield (VYM)

This ETF adopts the simple method of choosing stocks that have higher dividend yield when compared to other companies. This has resulted in building a diversified portfolio comprising 400 stocks with higher market capitalization. The majority of these stocks belong to the healthcare, consumer, and financial sectors. During the last decade, VYM delivered average annual returns of 12.9%. The expense ratio is the lowest in the industry at 0.06% per annum.

Vanguard Dividend Appreciation (VIG)

The ETF focuses on investing in companies that have a long history of increasing their dividend payouts over the years. The portfolio includes approximately 180 stocks with low yields. The ETF has earned average returns of 12.6% per year over the last 10 years. The expense ratio is 0.06%, which makes it an excellent option if you do not mind lower dividend returns currently but want to earn more in the future.

WisdomTree U.S. MidCap Dividend (DON)

This ETF invests in companies with a low market capitalization. Almost 70% of its portfolio companies have a market cap between $2 billion and $10 billion. Even the larger portfolio companies are the lowest in the large-cap segment. WisdomTree U.S. MidCap Dividend ETF holds stocks of over 380 companies and has given 13.3% annual returns over the past decade. However, the expense ratio at 0.38% is slightly higher.

Invesco Zacks Multi-Asset Income (CVY)

If you do not mind paying a high expense ratio to earn more returns, this high-dividend ETF fund is a good choice. This fund tracks the Zacks Multi-Asset Index that comprises 149 stocks of dividend-paying companies. The expense ratio is 0.97% and the SEC yield stands at 6.43%.

Invesco KBW High Dividend Yield Financial Portfolio (KBWD)

The fund focuses on investing in companies in the financial sector. KBWD keeps track of the KBW NASDAQ Financial Sector Dividend Yield Index comprising stocks of approximately 40 companies with small market capitalization within the financial sector. The 30-day SEC yield is high at 12.93% but the expense ratio is amongst the highest at 1.58%.

WisdomTree U.S. SmallCap Dividend Fund (DES)

It is advisable to diversify your ETF portfolio and include small-cap funds to mitigate the risks of large-cap funds. Within the small-cap category, the WisdomTree U.S. SmallCap Dividend Fund is one of the best available options. DES monitors the WisdomTree SmallCap Dividend Index comprising the remaining 25% companies of the market cap after eliminating 300 of the largest companies from the WisdomTree Dividend Index. This fund has more than 700 holdings in the portfolio and a moderate expense ratio of 0.38%.

Having gained an understanding of the best dividend ETFs, remember to choose ones that suit your investment objective, time horizon, and risk appetite. Considering factors like expense ratio and diversification along with high dividends will help you make an accurate decision.

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