If you’re hungry for dividends, there are plenty of dividend ETFs in the investment universe that can satisfy your appetite. But not every dividend investor is looking for just any fund that pays dividends.
While some dividend investors may be looking for a fund that focuses on stocks of companies with a history of growing dividends over time, other dividend investors may be looking only for high yield ETFs. Perhaps they want certain sectors that pay dividends. But then there will be some dividend-hungry investors that are looking to build a diverse selection of various types of dividend ETFs.
Here are 7 great ETFs for dividend-hungry investors:
- Global X SuperDividend ETF (NYSEARCA:SDIV)
- Vanguard High Dividend Yield ETF (NYSEARCA:VYM)
- Vanguard Dividend Appreciation ETF (NYSEARCA:VIG)
- Fidelity International High Dividend ETF (NYSEARCA:FIDI)
- iShares Emerging Markets Dividend ETF (NYSEARCA:DVYE)
- Vanguard Utilities ETF (NYSEARCA:VPU)
- iShares Mortgage Real Estate ETF (BATS:REM)
Knowing that there is a wide variety of dividend-hungry investors out there, we put together a broad menu of dividend ETFs to choose from, with different strengths for different investing styles. Let’s take a look.
ETFs for Dividend-Hungry Investors: Global X SuperDividend ETF (SDIV)
Expenses: 0.59%, or $59 for every $10,000 invested
SEC Yield: 7.93%
The hungriest of dividend investors, or those looking for high-yield ETFs, should know about Global X SuperDividend ETF (NYSEARCA:SDIV).
SDIV achieves its high yield of 7.93% by tracking the Solactive Global SuperDividend Index, which scours the entire globe to find high-yielding stocks.
Regional exposure for SDIV starts with a 27% allocation to U.S. stocks and a generous portion of emerging markets like China, Hong Kong, South Africa and Thailand, with a smattering of European countries like Great Britain. Sector exposure is to typical dividend-heavy areas of the market, such as real estate, energy and financials.
Keep in mind that the heavy exposure to emerging markets creates greater market risk. But if you don’t mind more volatility to get your high dividends, SDIV is worth a close look.
Vanguard High Dividend Yield ETF (VYM)
Expenses: 0.06%
SEC Yield: 2.85%
Dividend investors looking for low-cost dividend ETFs will like what they see with Vanguard High Dividend Yield ETF (NYSEARCA:VYM).
VYM tracks the FTSE High Dividend Yield Index, which consists of 416 stocks, mostly large-cap U.S. companies like JPMorgan Chase (NYSE:JPM), Johnson & Johnson (NYSE:JNJ) and Proctor and Gamble (NYSE:PG).
The sector exposure VYM shareholders get will be primarily financials, consumer staples and healthcare, with lower but more evenly diversified exposure to multiple other sectors.
So, if you aren’t looking for the highest yields, but rather above-average yields in a fund with reasonable market risk, VYM can make a fine addition to your portfolio.
Vanguard Dividend Appreciation ETF (VIG)
Expenses: 0.06%
SEC Yield: 1.61%
If you’re attracted to stocks of companies that have a track record of growing their dividends over time, you can get a basket of them with Vanguard Dividend Appreciation ETF (NYSEARCA:VIG).
Companies that grow their dividends tend to have consistent earnings and their stock performance tends to be more stable compared to growth stocks. For this reason, some investors seek out these stocks, not just for the dividends, but for the quality of the shares themselves.
VIG tracks the NASDAQ US Dividend Achievers Select Index, which represents 247 U.S. stocks with a record of growing their dividends on a year over year basis. Dividend-hungry investors can get a large helping of reliable dividend stocks like JPM, JNJ and Microsoft (NASDAQ:MSFT).
Fidelity International High Dividend ETF (FIDI)
Expenses: 0.39%
SEC Yield: 3.23%
Investors looking for dividends in developed countries outside of the U.S. should try Fidelity International High Dividend ETF (NYSEARCA:FIDI).
Dividend-hungry investors should be aware that high yields aren’t as easy to find in U.S. stocks as they are overseas. It’s typical to find higher yields in emerging markets ETFs than in those covering more developed regions of the world.
In translation, if you want yields higher than those typically found U.S. stocks, but don’t want to take the added risk associated with emerging markets, dividend ETFs like FIDI can get you that sweet spot of high yields without the extra risk.
For more detail on FIDI, the fund holds 117 large- and mid-cap stocks outside of the U.S. that pay high yields and are expected to continue paying and growing their dividends over time.
iShares Emerging Markets Dividend ETF (DVYE)
Expenses: 0.49%
SEC Yield: 5.91%
Dividend-hungry investors with an appetite for market risk may be able to get their fill with a fund like iShares Emerging Markets Dividend ETF (NYSEARCA:DVYE).
If you’re willing to go anywhere in the world to capture high yield, a good place to find it is in emerging markets. That means countries like China, Russia, Taiwan and Brazil, which account for about two-thirds of the regional exposure in DVYE.
Investing in emerging markets does tap up the risk a degree higher than developed countries and the U.S. but high yields may be enough of a reward to compensate for that added risk.
Vanguard Utilities ETF (VPU)
Expenses: 0.10%
SEC Yield: 3.04%
The utilities sector is full of dividend stocks and investors can conveniently buy a low-cost basket of them with Vanguard Utilities ETF (NYSEARCA:VPU).
VPU seeks to replicate the returns of the MSCI US Investable Market Utilities 25/50 Index, which represents 66 large- and mid-cap U.S. stocks in the utilities sector, most of which are electric utilities. Top holdings include NextEra Energy (NYSE:NEE), Duke Energy (NYSE:DUK) and Southern Co (NYSE:SO).
A bonus for dividend-hungry investors holding a fund like VPU is that the utilities sector can be a smart defensive play, as they tend to have less downside during recessions than the broader market.
iShares Mortgage Real Estate ETF (REM)
Expenses: 0.48%
SEC Yield: 6.05%
Real estate is a great sector for dividends, which makes a fund like iShares Mortgage Real Estate ETF (BATS:REM) a fund for dividend investors looking for high yields.
REM offers shareholders exposure to the U.S. residential and mortgage real estate sectors, targeting the subsets of domestic real estate stocks and mortgage real estate investment trusts (REITs).
While the high yields may be attractive to dividend-hungry investors, it’s worth noting the huge runup in price of 103.5% over the past year through March 31, 2021. Thus, potential buyers may love the 6.05% yield but should be cautious of the downside risk in the short term.
On the date of publication, Kent Thune did not personally hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.