Three ETFs Offering High Dividend Yields to Secure Passive Earnings
Generating income from your investments is a fantastic way to earn money without being tied down to a job. However, it does require some work, especially when it comes to choosing the right investments that align with your risk and return profile. Instead of picking individual stocks, consider investing in exchange-traded funds (ETFs), which offer diversification and trade like equities. Here are three income-generating ETFs that deserve your attention:
1. iShares Core High Dividend ETF (HDV)
The iShares Core High Dividend ETF tracks the Morningstar Dividend Yield Focus Index and has a low expense ratio of 0.08%. It primarily invests in 75 dividend-paying U.S. companies, with energy and consumer staple sectors making up over half of the ETF's holdings. Notable individual stocks in the ETF include energy giant ExxonMobil, Johnson & Johnson, and Chevron. As of the end of 2024, HDV had a 3.7% yield.
2. SPDR Portfolio S&P 500 High Dividend ETF (SPYD)
This ETF tracks the S&P 500 High Dividend Index, consisting of 80 high-dividend-yield stocks in the S&P 500. Unlike traditional S&P 500 index funds, SPYD equally weights each stock, preventing any one holding from significantly impacting the ETF's performance. Real estate, financials, and utilities are among the sectors with the largest weightings. As of Jan. 16, 2025, SPYD had a 4.4% yield, far surpassing the S&P 500 Index's 1.2%.
3. Nuveen ESG Dividend ETF (NUDV)
The Nuveen ESG Dividend ETF invests in the Nuveen ESG USA High Dividend Index, focusing on U.S. mid- and large-cap dividend-paying stocks with positive environmental, social, and governance (ESG) factors. The ETF has a 0.26% expense ratio and focuses on financials, industrials, and consumer staples. As of Jan. 1, 2025, NUDV had a 2.5% dividend yield.
While ESG investing is a controversial topic, it could potentially reduce risk and enhance long-term returns by helping companies run more efficiently and avoid certain pitfalls. Some popular high-dividend ETFs include the Vanguard High Dividend Yield ETF (VYM), Schwab US Dividend Equity ETF (SCHD), iShares Select Dividend ETF (DVY), and SPDR S&P Dividend ETF (SDY). Diversifying your investments across these ETFs can help you generate passive income while minimizing risk.
Investing in ETFs like the iShares Core High Dividend ETF and SPDR Portfolio S&P 500 High Dividend ETF can significantly boost your finance earnings due to their high dividend yields. Management of these funds focuses on picking dividend-paying companies, ensuring a consistent income stream through finance. Additionally, the Nuveen ESG Dividend ETF not only offers a decent yield but also invests in companies with positive ESG factors, potentially reducing risk and enhancing long-term returns.
