Top 6 High-Yield Dividend ETFs for Your Investment Portfolio
Discover the top six high-yield dividend ETFs to diversify and enhance your investment portfolio. These funds offer a mix of large-cap, mid-cap, and small-cap stocks with attractive dividend yields, suitable for different investor goals. Evaluate their returns, expense ratios, and sector focus to make informed investment decisions that match your risk appetite and financial targets.
Before choosing dividend-focused ETFs, assess your financial goals and risk tolerance. ETFs blend mutual fund or stock features, allowing you to buy shares that represent ownership in a diversified array of assets. Here are six leading high-dividend ETFs to consider:
Vanguard High Dividend Yield ETF (VYM)
This ETF filters stocks based on higher-than-average dividend yields, resulting in a diverse mix of roughly 400 large-cap stocks primarily from healthcare, consumer, and financial sectors.
Over the past decade, VYM has achieved average annual returns of 12.9%. Its expense ratio is notably low at just 0.06%, making it cost-effective.
Vanguard Dividend Appreciation ETF (VIG)
VIG invests in companies with a solid history of increasing dividends, comprising around 180 stocks with generally lower yields. Over the last 10 years, it averaged annual returns of 12.6%. Its expense ratio is 0.06%, ideal for investors prioritizing future growth over immediate high income.
WisdomTree U.S. MidCap Dividend ETF (DON)
This fund emphasizes mid-cap companies, with nearly 70% of holdings having a market cap between $2 billion and $10 billion. It includes over 380 stocks and has delivered 13.3% average annual returns over ten years, though with a slightly higher expense ratio of 0.38%.
Invesco Zacks Multi-Asset Income ETF (CVY)
For those willing to pay higher fees for increased potential returns, CVY tracks the Zacks Multi-Asset Index of 149 dividend-paying stocks. The expense ratio is 0.97%, with a SEC yield of 6.43%.
Invesco KBW High Dividend Yield Financial Portfolio (KBWD)
This ETF concentrates on financial sector companies, tracking the KBW NASDAQ Financial Sector Dividend Yield Index, which contains about 40 smaller-cap financial stocks. Its 30-day SEC yield is 12.93%, but the expense ratio is relatively high at 1.58%.
WisdomTree U.S. SmallCap Dividend ETF (DES)
Avoid concentration risk by adding small-cap funds like DES. It tracks the WisdomTree SmallCap Dividend Index, excluding the largest companies and holding over 700 stocks. The expense ratio is moderate at 0.38%.
When selecting high-dividend ETFs, consider your investment horizon, risk tolerance, and diversification needs. Comparing expense ratios and growth prospects helps craft an optimal portfolio aligned with your financial objectives.
