High yield etfs for 2021

High yield etfs for 2021 DEFAULT

Best dividend ETFs and how to invest in them

For public companies, one of the simplest ways to communicate financial stability to shareholders is through cash dividend payments. The most established companies often share a portion of their profits with investors, rewarding them with cash dividends. For investors, dividends provide a steady stream of passive income.

Owning dividend-paying companies through exchange-traded funds (ETFs) can be highly efficient. A dividend ETF is a fund that invests exclusively in dividend-paying companies. Fund managers select these companies based on specific attributes such as size, industry, geographic region, and dividend history. Next, they group them into a basket of holdings representing an investment category such as “dividend aristocrats.”

Once you select a dividend investment style, every holding in that ETF will have a similar profile.

For example, suppose you choose a fund that only invests in large-cap companies with a history of consistently paying dividends. In that case, a fund manager cannot deviate from that investment strategy. This principle is important as the investment style you choose will determine the varying degrees of risk and the potential returns.

For retail investors, ETFs are convenient because they provide instant diversification at a low cost. This added benefit makes dividend ETFs appealing to market participants, especially when picking stocks requires a certain level of investment knowledge.

Top dividend ETFs 

Below are some of the most widely held dividend ETFs on the market. (Data as of Oct. 11, 2021)

Vanguard Dividend Appreciation ETF (VIG) 

VIG tracks the performance of the NASDAQ U.S. Dividend Achievers Select Index. The investment strategy focuses on dividend growth, selecting companies that have consistently increased dividend payments for at least a decade.

Fund’s dividend yield: 1.7 percent

Top holdings: Microsoft (MSFT), JPMorgan Chase (JPM), and Johnson & Johnson (JNJ)

Expense ratio: 0.06 percent

Assets under management: ~$62 billion

Vanguard High Dividend Yield ETF (VYM) 

VYM tracks the performance of the FTSE High Dividend Yield Index. The index selects high-yield dividend-paying companies based in the U.S., excluding REITs (real estate investment trusts).

Fund’s dividend yield: 2.8 percent

Top holdings: JPMorgan Chase (JPM), Johnson & Johnson and Home Depot (HD)

Expense ratio: 0.06 percent

Assets under management: ~$39 billion

SPDR S&P Dividend ETF (SDY)

SDY tracks the performance of the S&P High Yield Dividend Aristocrats Index. The index screens for companies that have consistently increased dividend payments for at least 20 consecutive years.

Fund’s dividend yield: 2.6 percent

Top holdings: AT&T (T), Exxon Mobil (XOM) and Chevron (CVX)

Expense ratio: 0.35 percent

Assets under management: ~$19 billion

iShares Select Dividend ETF (DVY) 

DVY tracks the performance of the Dow Jones Select Dividend Index. The index selects high-dividend yield companies — about 100 of them — based in the United States.

Fund’s dividend yield: 3.3 percent

Top holdings: Altria Group (MO), ONEOK (OKE), and AT&T (T)

Expense ratio: 0.38 percent

Assets under management: ~$18 billion

ProShares S&P 500 Dividend Aristocrats ETF (NOBL) 

NOBL tracks the performance of the S&P 500 Dividend Aristocrats Index. The index screens for multinational household names with a history of increasing dividends for at least 25 years, with some of them doing so for more than 40 years.

Fund’s dividend yield: 2.0 percent

Top holdings: Nucor (NUE), Albemarle (ALB) and West Pharmaceutical Services (WST)

Expense ratio: 0.35 percent

Assets under management: ~$9 billion

How dividends work

Dividend payments are usually issued to shareholders every quarter, although, in some cases, there can be special dividends that act as a one-time bonus. To be entitled to an upcoming dividend, a shareholder must own a company’s stock up to and including what’s known as the ex-dividend date.

Investors pay particular attention to the dividend yield, highlighting how much a company or fund pays in relation to its stock price. Dividend yields are calculated by taking the annual dividend payment and dividing it by the share price. The yield is shown as a percentage. Yields may be calculated based upon payments made over the last year or payments expected to be made over the next year.

For example, if a company’s annual dividend payment is $4 and the share price is $100, you would see a dividend yield of 4 percent with a quarterly distribution of $1.

To be sure, a high yield doesn’t always mean a solid investment opportunity. Indeed, many investors view the highest yields as a red flag as a company’s shares might have taken a hit, causing yields to rise. Or, perhaps, a company may be trying to lure investors with high yields.

As a rule, be sure to look at a company’s entire financial picture before investing. A dividend payment is just the icing on the cake.

How to invest in dividend ETFs

A solid dividend strategy is an essential component of every investor’s portfolio. Since the 1930s, dividends have accounted for 41 percent of the S&P 500’s total returns, according to research by Hartford Funds. And when dividends are reinvested, the returns are even higher, accounting for 84 percent of the S&P’s total returns since 1970.

Inherently, dividend investing tends to be less risky. Companies in a position to issue regular payments are often more cash-rich than those trying to rapidly grow their businesses. Well-established names also have a history of boosting their dividend payouts every year and take a lot of pride in doing so.

When choosing dividend ETFs, here are four steps to consider:

  • Determine your financial goals: The type of investments you choose depends on what you are trying to achieve. For example, someone about to retire will likely have a more conservative approach to investing. So always let your financial objectives drive your decision-making.
  • Research dividend funds: When selecting dividend ETFs, pay attention to factors like dividend history, dividend yield, the fund’s performance, expense ratios, top holdings, and assets under management. Investors can find this information in a fund’s prospectus.
  • Outline your asset mix: Before investing, do an inventory of what you own and how you want to allocate your assets. Remember, the key is to remain diversified.
  • Know what you own: By periodically reviewing your investments, you can take charge of your finances and make any adjustments needed. Leverage any free resources from your broker, like meeting with a financial planner, and always ask questions. Ultimately, there’s no such thing as a hands-off investment.

Like any other investment, dividend ETFs are susceptible to losses. The magnitude of potential losses is tied to the level of risk contained in the portfolio. So a fund that invests heavily in potentially riskier assets like companies in emerging markets will have a very different risk profile than a fund that invests in established, tried-and-true names. Macroeconomic factors like the interest rate environment also play a factor.

Are dividend ETFs a good investment for you?

An investment approach focused on dividends can make sense for many people at different stages of their investing lives. Dividends can be a great way to build wealth over time, as growing companies distribute earnings to their shareholders. Dividends also make sense for those looking to generate income from their investments, such as those who have reached retirement age. Always think about your financial goals and consider whether dividend ETFs can help you achieve them.

What to look for in a dividend ETF

Here are some things to consider when choosing a dividend ETF:

  • Fees: You’ll want to understand the ETF’s expense ratio before making an investment. Some ETFs have very low fees, while others can run higher and eat into your returns.
  • Yield: Pay attention to a dividend ETF’s yield to understand what kind of income you can expect to earn over the next year. Remember that future dividends aren’t guaranteed, but a yield will give you an idea of what to expect.
  • Liquidity: Some ETFs might have less liquidity than the more popular funds offered by major ETF managers. When the time comes, this could make it harder to sell.
  • Portfolio makeup. Keep an eye on the fund’s holdings and see if it has a lot of exposure to certain companies or industries. If a fund has significant exposure to one industry, you likely won’t get the diversification benefits offered by other funds.

How are dividends taxed?

Depending on the type of investment account you own, dividend distributions are taxed as regular income or at a reduced rate under special considerations. These rules only apply for holdings outside tax-advantaged accounts like a 401(k) or an IRA, where you won’t pay taxes on dividends or capital gains.

Bottom line

History shows that dividends have been a significant source of income for investors. When consistent dividend payments and rising stock values are combined, they can be a powerful wealth-building tool.

Learn more:

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

Sours: https://www.bankrate.com/investing/best-dividend-etfs/

Top 100 Highest Dividend Yield ETFs

REVSColumbia Research Enhanced Value ETF22.32%$10,985.605,789AMOMQRAFT AI-Enhanced U.S. Large Cap Momentum ETF21.39%$30,907.7011,285TAAGTrend Aggregation Growth ETF15.31%$1,978.923,291ERTHInvesco MSCI Sustainable Future ETF14.99%$421,581.0019,276WTMFWisdomTree Managed Futures Strategy Fund14.85%$139,225.0015,456GLCNVanEck China Growth Leaders ETF14.56%$28,988.403,241OILKProShares K-1 Free Crude Oil Strategy ETF13.54%$72,535.3018,868RYLDGlobal X Russell 2000 Covered Call ETF11.62%$530,066.00385,371QYLDGlobal X NASDAQ 100 Covered Call ETF11.40%$4,929,720.003,193,856IDIVU.S. Equity Cumulative Dividends FundSeries 202711.24%$33,489.4031,206TYDDirexion Daily 7-10 Year Treasury Bull 3x Shares11.23%$22,981.1013,021TEGSCollaborative Investment Series Trust Trend Aggregation ESG Fund10.48%$8,738.406,238PEXProShares Global Listed Private Equity ETF9.94%$23,242.402,326GCCWisdomTree Enhanced Commodity Strategy Fund9.47%$189,890.0081,276TADSThe Active Dividend Stock ETF9.29%$7,245.9516,382XYLDGlobal X S&P 500 Covered Call ETF9.22%$646,037.00172,061AMZAInfraCap MLP ETF9.09%$314,113.0081,929YYYAmplify High Income ETF9.00%$443,338.00208,850SDCIUSCF SummerHaven Dynamic Commodity Strategy No K-1 Fund8.65%$8,237.601,585FLSPFranklin Liberty Systematic Style Premia ETF8.53%$55,971.001,267MLPAGlobal X MLP ETF8.39%$1,108,150.00272,452GRESIQ Global Resources ETF8.29%$29,240.306,229IAUFiShares Gold Strategy ETF8.26%$29,766.105,989HIPSGraniteShares HIPS US High Income ETF8.23%$71,662.5033,720GTOInvesco Total Return Bond ETF7.98%$979,668.00115,029DRWWisdomTree Global ex-US Real Estate Fund7.90%$59,963.8010,835PSPInvesco Global Listed Private Equity ETF7.89%$269,399.0092,697BIZDVanEck BDC Income ETF7.81%$512,636.00179,171NUSINationwide Risk-Managed Income ETF7.75%$724,161.00379,494CEFSSaba Closed-End Funds ETF7.69%$85,884.1016,579PFFAVirtus InfraCap U.S. Preferred Stock ETF7.51%$522,215.00170,865AMLPAlerian MLP ETF7.50%$5,638,910.002,191,747UTRNVesper U.S. Large Cap Short-Term Reversal Strategy ETF7.46%$84,434.607,021SDIVGlobal X SuperDividend ETF7.45%$960,497.00468,395JEPIJPMorgan Equity Premium Income ETF7.36%$4,196,510.00875,217HYUPXtrackers High Beta High Yield Bond ETF7.16%$19,137.203,542MORTVanEck Mortgage REIT Income ETF7.15%$319,987.0089,806HYLDHigh Yield ETF6.89%$132,365.0016,874KBWDInvesco KBW High Dividend Yield Financial ETF6.81%$493,875.00141,688LKORFlexShares Credit-Scored U.S. Long Corporate Bond Index Fund6.81%$56,913.605,230PHYLPGIM Active High Yield Bond ETF6.81%$66,693.608,353GOAUUS Global GO GOLD and Precious Metal Miners ETF6.72%$94,399.5030,689PCEFInvesco CEF Income Composite ETF6.69%$956,126.00144,838DVYEiShares Emerging Markets Dividend ETF6.68%$832,397.0083,386VPCVirtus Private Credit Strategy ETF6.63%$27,104.8033,217ALTYGlobal X Alternative Income ETF6.55%$32,618.6016,045YLDPrincipal Active High Yield ETF6.47%$233,399.007,523HNDLStrategy Shares Nasdaq 7HANDL Index ETF6.46%$1,248,270.00694,941VWIDVirtus WMC International Dividend ETF6.43%$7,167.11200SDEMGlobal X MSCI SuperDividend Emerging Markets ETF6.34%$64,407.5021,417SRETGlobal X SuperDividend REIT ETF6.29%$469,799.00331,718WBNDWestern Asset Total Return ETF6.24%$128,297.0012,452ENTRERShares Entrepreneurs ETF6.23%$141,166.002,815PAKGlobal X MSCI Pakistan ETF6.21%$22,942.603,482CHIRGlobal X MSCI China Real Estate ETF6.13%$4,244.228,327EDVVanguard Extended Duration Treasury ETF6.06%$1,228,410.00232,747BLVVanguard Long-Term Bond ETF6.06%$5,992,310.00288,286NIFEDirexion Fallen Knives ETF6.02%$5,286.15556FEMBFirst Trust Emerging Markets Local Currency Bond ETF5.97%$264,545.0054,195DRSKAptus Defined Risk ETF5.94%$810,779.00153,924PFFRInfraCap REIT Preferred ETF5.92%$85,155.1017,215EMHYiShares J.P. Morgan EM High Yield Bond ETF5.85%$476,979.0074,221BKHYBNY Mellon High Yield Beta ETF5.82%$47,795.502,774EYLDCambria Emerging Shareholder Yield ETF5.75%$86,712.1013,298SPFFGlobal X SuperIncome Preferred ETF5.66%$232,980.0071,661ESHYXtrackers J.P. Morgan ESG USD High Yield Corporate Bond ETF5.65%$24,297.201,355UBOTDirexion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X Shares5.64%$45,916.3011,271KBWYInvesco KBW Premium Yield Equity REIT ETF5.63%$334,782.00135,062SPUUDirexion Daily S&P 500 Bull 2x Shares5.61%$57,465.8016,798HYGVFlexShares High Yield Value-Scored US Bond Index Fund5.56%$563,364.0094,486DOOWisdomTree International Dividend ex-Financials Fund5.55%$137,757.006,906HDEFXtrackers MSCI EAFE High Dividend Yield Equity ETF5.50%$804,019.00175,942KHYBKraneShares Asia Pacific High Yield Bond ETF5.48%$15,290.007,248HYLSFirst Trust Tactical High Yield ETF5.47%$2,320,330.00201,705IDViShares International Select Dividend ETF5.44%$4,421,840.00482,092DIVGlobal X SuperDividend U.S. ETF5.43%$672,543.00161,642QYLGGlobal X Nasdaq 100 Covered Call & Growth ETF5.43%$42,254.3016,739MLPXGlobal X MLP & Energy Infrastructure ETF5.42%$831,813.00113,655MFMSMotley Fool Small-Cap Growth ETF5.36%$176,823.0015,617SHYLXtrackers Short Duration High Yield Bond ETF5.35%$85,734.1018,609HYEMVanEck Emerging Markets High Yield Bond ETF5.31%$1,286,900.00282,177HYLBXtrackers USD High Yield Corporate Bond ETF5.31%$6,709,170.002,223,171GYLDArrow Dow Jones Global Yield ETF5.29%$40,005.006,880PGHYInvesco Global Short Term High Yield Bond ETF5.26%$236,049.0047,947FLRUFranklin FTSE Russia ETF5.25%$23,491.004,162SPHYSPDR Portfolio High Yield Bond ETF5.23%$540,015.00163,117USAIPacer American Energy Independence ETF5.21%$26,570.001,968CEYVictoryShares Emerging Market High Dividend Volatility Wtd ETF5.20%$17,167.301,718EINCVanEck Energy Income ETF5.20%$29,138.305,221PSKSPDR ICE Preferred Securities ETF5.18%$1,488,180.00127,630EMBDGlobal X Emerging Markets Bond ETF5.18%$131,469.0010,433LVHILegg Mason International Low Volatility High Dividend ETF5.16%$80,737.408,512ENFRAlerian Energy Infrastructure ETF5.15%$67,788.0017,586USHYiShares Broad USD High Yield Corporate Bond ETF5.14%$8,227,150.001,477,327WOMNImpact Shares YWCA Women’s Empowerment ETF5.14%$32,552.002,030FYLDCambria Foreign Shareholder Yield ETF5.12%$37,368.3013,071FTRIFirst Trust Indxx Global Natural Resources Income ETF5.12%$37,982.0017,945PFFDGlobal X U.S. Preferred ETF5.10%$2,434,960.00646,164RAAXVanEck Inflation Allocation ETF5.08%$22,585.909,382IBHEiShares iBonds 2025 Term High Yield & Income ETF5.08%$39,827.407,070
Sours: https://etfdb.com/compare/dividend-yield/
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Best Dividend ETFs for Q4 2021

Dividend exchange-traded funds (ETFs) are designed to invest in a basket of dividend-paying stocks. Stable, attractive dividends tend to be associated with bigger, less risky blue-chip companies, although any company can share their earnings with shareholders, and some of the highest yields are offered by smaller, less established names. Many ETFs operating in this space favor stable income with room to grow. However, others might pursue higher, potentially less secure dividend payments in the hope that such generosity is sustainable and not detrimental to the company's finances or future growth prospects.

Key Takeaways

  • The top three dividend ETFs have significantly outperformed the broader U.S. market over the past year.
  • The dividend ETFs with the best one-year trailing total return are KBWD, CSB, and SDVY.
  • The top holdings of these ETFs are Orchid Island Capital Inc., American National Group Inc., and Jefferies Financial Group Inc., respectively.

Dividend ETFs often are favored by more risk-averse, income-seeking investors. They also are used by investors to balance riskier investments in their portfolios. In addition to offering a regular income stream, these ETFs generally offer much lower management expense ratios (MERs) than dividend-focused mutual funds.

There are 90 dividend ETFs that trade in the U.S., excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). In the 12 months leading up to Aug. 11, 2021, the top three dividend ETFs significantly outperformed the S&P 500, which in this time frame delivered a total return of 35.5%. The best-performing dividend ETF, based on performance over the past year, is the Invesco KBW High Dividend Yield Financial ETF (KBWD). We examine the top three best dividend ETFs below. All numbers are as of Aug. 11, 2021.

Invesco KBW High Dividend Yield Financial ETF (KBWD)

  • Performance Over One-Year: 57.4%
  • Expense Ratio: 1.24%
  • Annual Dividend Yield: 6.79%
  • Three-Month Average Daily Volume: 142,242
  • Assets Under Management: $436.1 million
  • Inception Date: Dec. 2, 2010
  • Issuer: Invesco

KBWD tracks the KBW Nasdaq Financial Sector Dividend Yield Index, a modified-dividend, yield-weighted index of companies whose primary business is providing financial services and products. The ETF offers exposure to banks and other financial institutions that pay dividends. Though it invests in both growth and value stocks across the market-cap spectrum, the majority of its holdings are in small-cap value stocks. This makes KBWD a somewhat risky bet because many of the securities that make up its portfolio are issued by companies that are not the most fiscally stable. For this reason, the fund is better aimed at investors with a high risk tolerance.

KBWD's top three holdings include Orchid Island Capital Inc. (ORC), a specialty finance company that invests in residential mortgage-backed securities (MBS) on a leveraged basis; FS KKR Capital Corp. (FSK), a business development company that provides customized credit solutions; and TCG BDC Inc. (CGBD), a specialty finance company that provides flexible financing solutions to middle-market companies.

VictoryShares US Small Cap High Div Volatility Wtd ETF (CSB)

  • Performance Over One-Year: 57.1%
  • Expense Ratio: 0.35%
  • Annual Dividend Yield: 2.99%
  • Three-Month Average Daily Volume: 25,072
  • Assets Under Management: $257.0 million
  • Inception Date: July 8, 2015
  • Issuer: Crestview

CSB tracks the Nasdaq Victory U.S. Small Cap High Dividend 100 Volatility Weighted Index, which gauges the performance of the top 100 dividend-yielding stocks within the broader Nasdaq Victory U.S. Small Cap 500 Volatility Weighted Index. The ETF provides exposure to some of the highest dividend-yielding small-cap stocks in the U.S. Smaller companies tend to exhibit higher volatility, increasing the risk associated with investing in this fund. Also, dividend payouts are never guaranteed.

CSB follows a blended strategy, investing in a mix of both value and growth stocks, and the financial sector receives the largest allocation in the fund, followed by industrials and utilities. The ETF's top three holdings include American National Group Inc. (ANAT), an insurance company; MGE Energy Inc. (MGEE), a utility holding company that produces and distributes electricity and natural gas; and American States Water Co. (AWR), a water and electricity utility company.

First Trust SMID Cap Rising Dividend Achievers ETF (SDVY)

  • Performance Over One-Year: 55.9%
  • Expense Ratio: 0.60%
  • Annual Dividend Yield: 1.07%
  • Three-Month Average Daily Volume: 79,691
  • Assets Under Management: $178.7 million
  • Inception Date: Nov. 1, 2017
  • Issuer: First Trust

SDVY tracks the Nasdaq U.S. Small Mid Cap Rising Dividend Achievers Index, which is designed to track 100 small- and mid-cap companies that have a history of raising their dividends and are expected to continue doing so in the future. The ETF follows a blended strategy, investing in both growth and value stocks, with financials receiving the largest allocation within the fund, followed by industrials and consumer discretionary stocks.

SDVY's top three holdings include Jefferies Financial Group Inc. (JEF), an investment bank and financial services company; Tetra Tech Inc. (TTEK), a provider of consulting, engineering, program management, construction management, and technical services; and Crane Co. (CR), a designer and manufacturer of highly engineered industrial products.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Sours: https://www.investopedia.com/articles/etfs/top-etfs/
Here Is The Best Dividend ETF in Australia (2021)

Top Dividend Growth ETFs Ranked For The Rest Of 2021

Dividend ETFs haven't necessarily had the best 2021. After outperforming the S&P 500 during the first five months of the year, sentiment has shifted back to mega-cap growth and tech. All of the major dividend ETFs across all strategies - dividend growth, dividend quality and high yield - are now trailing the large-cap benchmark year-to-date by between 2% and 6%. With the Fed's actions over the past few years, this shouldn't be surprising. The trillions of dollars in stimulus payments and a persistent zero interest rate environment have made conditions ideal for growth stocks to lead.

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But the long-term track record of dividend growers is undeniable. This notion has become overshadowed in the last few years since the market has been dominated by the big growth names and almost nothing else, but history shows that dividends typically comprise a large portion of an investor's total return.

The 2010s experienced one of the smallest dividend contributions to total return going back to the 1940s, but if you look all the way back until 1930, studies have shown that more than 40% of returns have come from dividends. Investors want to load up their portfolios with growth stocks today, but it would be a mistake to avoid dividend stocks in your portfolio regardless of your age or where you are in your savings cycle.

A similar multi-decade historical look shows that, on average, even the worst-performing dividend payer group has outperformed those stocks that don't pay dividends at all.

Even better is the fact that dividend stocks often come with superior risk-adjusted returns as well. Since dividend payers are usually more mature companies with stronger cash flows and healthier balance sheets, they're less exposed to the market swings that can come with more speculative investments.

Dividend growth stocks, those from companies who have long histories of not just paying but growing their dividend every year, are an especially attractive group. The predictability of income generation from this segment of the portfolio along with the fact that shareholders are likely to get a pay raise every year make them highly desirable within the income seeking community.

There are a lot of solid dividend growth ETFs as well if you don't want to subject yourself to the research and work that can be involved in picking individual stocks. Companies, such as Vanguard and State Street, offer very diversified portfolio at rock bottom fees that can make great portfolio cornerstones, but smaller issuers, such as Invesco, First Trust and ProShares, offer attractive choices as well.

Let's lay down the foundation for these ETF rankings.

Ranking The Dividend Growth ETFs

The variety of choices makes distinguishing the best from the rest a little challenging. You've probably heard most financial pundits talk about focusing on funds with low expense ratios. That can certainly be a big factor in deciding which ETF to go with (it's probably the most important factor, in my view), but there are a lot of things that could go into make the right choice.

That's where I'm going to try to make things easier for you. Using a methodology that I've developed which takes into account many of the factors that should be considered and weighting them according to their perceived level of importance, we can rank the universe of available ETFs in order to help identify the best of the best for your portfolio.

Now, this certainly won't be a perfect ranking. The data, of course, will be objective, but judging what's more important is very subjective. I'm simply going off of my years of experience in the ETF space in helping investors craft smart, cost-efficient portfolios.

Methodology And Factors For Ranking ETFs

Before we dive in, let's establish a few ground rules.

First, all of the data is used is coming from ETF Action. They have gone through the ETF universe to identify those ETFs using a dividend growth equity strategy. There are currently 23 that qualify and we'll be using their categorization as a starting point. Many thanks to them for opening up their vast database for my use.

Second, let's run down the factors I used in the ranking methodology.

  • Expense Ratio - This is perhaps the most important factor since it's the one thing investors can control. If you choose a fund that charges 0.1% annually over a fund that charges 1%, you're automatically coming out ahead by 0.9% annually. You can't control what a fund returns, but you can control what you pay for the portfolio. Lower expense ratios equal more money in your pocket.
  • Spreads - This relates to how cheaply you can buy and sell shares. Generally speaking, the larger the fund, the lower the spreads. Bigger funds usually have many buyers and sellers. Therefore, it's easier to find shares to transact and that makes them cheaper to trade. On the other hand, small funds tend to trade fewer shares and investors often need to pay a premium to buy and sell. Considering expense ratios and spreads together usually give you a better idea of the total cost of ownership.
  • Diversification - Generally speaking, the broader a portfolio is, the better chance it has at reducing overall risk. A fund, such as the Energy Select Sector SPDR ETF (XLE), provides a good example. 45% of the fund's total assets go to just two stocks - ExxonMobil and Chevron. By buying XLE, you're putting a lot of faith in just those two companies. An equal-weighted fund, such as the Invesco S&P 500 Equal Weight Energy ETF (RYE), would score higher on diversification than XLE.
  • FactSet ETF Scores - FactSet calculates its own proprietary ETF ranking for efficiency, tradeability and fit. They basically are designed to tell us if an ETF is doing what it sets out to do. I'm not going to copy and paste that work that they're doing, but there is some influence there to make sure my rankings are on the right path.

There are a few other minor factors thrown into the mix, but these are the main factors considered.

One thing that is not considered is historical returns. Most ETFs are passively-managed and are simply trying to track an index, not outperform. ETFs shouldn't be penalized for low returns simply because the index they're tracking is out of favor at the moment.

I'm ranking ETFs based on more basic structural factors. Are they cheap to own? Are they liquid? Do they minimize trading costs? Do they maintain risk-reducing diversification benefits?

Being in the bottom half of the list doesn't automatically make a fund "bad". It simply means that due to a low asset base, a high expense ratio, a concentrated portfolio or some other factor, it poses additional costs or downside risks.

Top Dividend Growth ETF Rankings For 2021

There are five dividend growth ETFs that are significantly larger than the rest, capped off with the monolith Vanguard Dividend Appreciation ETF (VIG) at the top. Since the most popular ETFs are usually the low cost leaders and their sheer size allows trading costs to be razor thin, the large ETFs tend to rise to the top of these rankings.

You'll see that's the case here when I use my ranking methodology to put all 23 dividend growth ETFs through the algorithm.

VIG captures the #1 spot on this list and it's easy to see why. Its 0.06% expense ratio is by far the lowest in this category and it's also got the lowest trading costs, making it highly efficient and tradeable. At $63 billion in assets, it's also by far the biggest fund in this category and many investors use it as the core of their dividend portfolios. The 1.5% trailing 12 month dividend yield won't necessarily get investors too excited, but VIG, according to my ranking system at least, does it better than anyone else. The international version of this strategy, the Vanguard International Dividend Appreciation ETF (VIGI) comes in at #5 here.

The ProShares trio of dividend aristocrat/growers ETFs - the ProShares S&P 500 Dividend Aristocrats ETF (NOBL), the ProShares S&P MidCap 400 Dividend Aristocrats ETF (REGL) and the ProShares Russell 2000 Dividend Growers ETF (SMDV) - all occupy top 10 positions. The requirements for qualifying for these funds get looser as the companies get smaller - NOBL requires a 25-year growth record, REGL requires 15 years and SMDV requires just 10. These funds are often considered the "go-to" ETFs for straight dividend grower exposure without any frills. Their expense ratios between 0.35% and 0.41% are a tad on the high side, which prevents them from higher up these rankings.

The First Trust Rising Dividend Achievers ETF (RDVY) is an interesting option if you're looking for a tad more growth in your dividend strategy. It requires companies have a comparatively modest 5-year dividend growth streak, but also makes sure they meet a number of dividend quality benchmarks, such as payout ratio, cash-to-debt and earnings, to help ensure the company can keep growing the dividend into the future. The short minimum growth streak allows more emerging names, including several in the tech space, to qualify for the portfolio giving it a bit more of a growth tilt.

The Freedom Day Dividend ETF (MBOX) is the highest-ranked "come out of nowhere" kind of fund on this list. This fund is actively-managed and, like RDVY, uses a number of fundamental and quantitative metrics, such as cash flows, dividend histories, valuation metrics, earnings ratios in order to identify companies that have the ability to make multiple dividend increases well into the future. The fund doesn't require a minimum dividend growth history in order to qualify and evaluates stocks based solely on their future dividend growth potential. MBOX generally holds between 30-50 stocks at a time and generally underweights higher yielders in order to provide an extra degree of stability. It was launched just in May of this year and has a modest $27 million in assets, but it looks like it's already off to a solid start.

Other funds I generally like on this list include the Invesco Dividend Achievers ETF (PFM) and the ProShares S&P Technology Dividend Aristocrats ETF (TDV).

The SoFi Weekly Dividend ETF (WKLY) is a bit of a unicorn and deserves a mention. According to the company, qualifying stocks must have "maintained their dividend payments over the last 12 months, been forecasted to continue to pay over the next 12 months, and have met a number of additional screens designed to remove companies at risk of reducing their dividend payouts". The gimmick, of course, is that the fund pays a fixed $0.02 per share dividend every Thursday to appeal to those folks who want a predictable paycheck every week. The fixed nature of the distribution requires a bit of forecasting and maintenance since most stocks only pay their dividends quarterly. It's an interesting idea, but so far has gained little interest.

The funds in the bottom half of the list aren't necessarily bad funds, but most suffer from one of two things - they're internationally focused, which tend to come with higher expense ratios and get dinged especially hard when low cost is advantageous, or have tiny asset base, which can make trading excessively costly. The idea of Europe, international or emerging markets dividend growers adds some nice diversification potential to the portfolio, but most of them, with the notable exception of VIGI, are too small to really be investable at the moment.

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Etfs high 2021 yield for

10 High-Yield ETFs for Income-Minded Investors

Like all investing strategies, high-yield ETFs are a bit of a balancing act.

On one hand, stocks that deliver tremendous yield can be enticing because of "guaranteed" paydays that are two times, three times or even five times the typical dividend stock in the S&P 500.

But the truth is there are no guarantees on Wall Street. Firms that were very generous last quarter sometimes wind up cutting their dividends this quarter or seeing their shares tumble as a result of poor performance.

High-yield ETFs help you defray that risk somewhat by investing across dozens if not hundreds of individual issues. Nonetheless, it's always important to "pop the hood" and see how these funds fit in with your overall portfolio and your personal risk tolerance.

The following list of high-yield ETFs should provide you with a few examples of the alternatives that are out there, and how each strategy balances its risks with potential rewards. With the average yield of the Standard & Poor's 500 index at just under 1.6% at present, every one of these funds is well ahead of the game, with yields of at least 3.0% (but many that are much higher).

Data is as of March 4. Yields represent the trailing 12-month yield, which is a standard measure for equity funds, unless otherwise indicated

1 of 10

SPDR Portfolio S&P 500 High Dividend ETF

A lot of cash
  • Assets under management: $2.5 billion
  • Dividend yield: 4.4%
  • Expenses: 0.07%

For many income-oriented investors, the desire for yield also comes along with the desire to have continued exposure to the stock market. Those who want to be firmly rooted in equities but generate a bit more income than you'd get from the typical stocks on Wall Street should consider the SPDR Portfolio S&P 500 High Dividend ETF (SPYD, $37.57).

SPYD is about as straightforward as high-yield ETFs get. As the name implies, this fund is benchmarked to the S&P 500 index of the largest U.S. corporations, then screens out the stocks that don't offer large dividends. That means a portfolio of just 80 stocks at present, but also a yield that's roughly three times the broad index.

Perhaps unsurprisingly, that also means a significant change in the industry focus of this fund vs. broader index funds. Specifically, financials represent a little less than a quarter of the fund, followed by 19% in real estate. Top holdings at the moment include energy plays HollyFrontier (HFC) and ConocoPhillips (COP).

Learn more about SPYD at the SPDR provider site.

2 of 10

Invesco KBW High Dividend Yield Financial ETF

The front of a bank building
  • Assets under management: $355.3 million
  • Dividend yield: 8.2%
  • Expenses: 1.24%

If you're really after yield and want some bias toward the financial sector – which you might amid rising rates at present – you might want to consider a focused bet on the sector.

"A simple way to play continued yield upside is to favor shorter duration equities over longer duration ones," says BCA Research. "This implies that investors should hedge against the steepening yield curve by favoring value equities over growth stocks, and the financial sector over tech."

You can get that kind of exposure via the InvescoKBW High Dividend Yield Financial ETF (KBWD, $18.65), which includes only financial stocks, and only the very highest dividend payers among them.

The list of holdings is pretty small and focused as a result of this tactical approach, with only about 40 total components in this ETF at present. The list of names may not be familiar, with top stocks including Prospect Capital (PSEC), a business development company (BDC), and Apollo Commercial Real Estate Finance (ARI), which operates mainly in the mortgage market.

There's obviously risk when you're focusing on a small list of stocks in a specific sector, but it also allows KBWD to be among the most generous high-yield ETFs, dwarfing yields of funds comprised of bigger-name dividend stocks.

Learn more about KBWD at the Invesco provider site.

3 of 10

Vanguard Real Estate ETF

Commercial real estate investors
  • Assets under management: $33.7 billion
  • Dividend yield: 3.8%
  • Expenses: 0.12%

Another sector bet to consider alongside financials is real estate.

Real estate is perhaps one of the most reliable sources of income, as regular rent checks each month offer a regular stream of cash that can be returned to shareholders. And real estate investment trusts (REITs) are in fact required to distribute at least 90% of their taxable income to shareholders in the form of dividends.

Vanguard Real Estate ETF (VNQ, $85.92) offers a deep lineup of some 180 stocks despite a sector-oriented approach, so you're getting a pretty diversified lineup. These include American Tower (AMT), which owns properties that host communications towers, or warehouse operator Prologis (PLD), proving these aren't just commercial real estate plays.

This portfolio offers up a yield of nearly 4% right now that's much more generous than most other straightforward sector funds that don't put a specific emphasis on yield, such as KBWD.

In the wake of the 2008 financial crisis, it should go without saying that real estate is not a risk-free sector. Putting all your eggs in this one basket could leave your portfolio exposed should similar troubles ever return to Wall Street. But it's undeniable that if you're hungry for yield, this is one of the best high-yield ETFs to explore.

Learn more about VNQ at the Vanguard provider site.

4 of 10

Global X SuperDividend REIT ETF

Paris real estate
  • Assets under management: $414.3 million
  • Dividend yield: 8.0%
  • Expenses: 0.59%

Another real-estate focused fund worth calling out is Global X SuperDividend REIT ETF (SRET, $9.17). This ETF takes an even thinner slice of the stock market, with a focus on the highest-yielding real estate investments on Wall Street to create a curated list of about 30 total holdings that all offer tremendous paydays.

This list is split 60/40 regular REITs and mortgage REITs (mREITs), the latter of which deals specifically in paper rather than actual properties. They deal on the financing side of things and typically operate by borrowing a ton of cash, then lending it out at higher interest rates to profit handsomely from the spread. These include names Two Harbors (TWO) and Chimera Investment (CIM). More traditional real estate holdings include long-term specialist LTC Properties (LTC) and single-tenant net-lease REIT W.P. Carey (WPC).

When things go well, income-oriented investors will be thrilled. But keep in mind things don't always go well – mREITs especially have a tendency to cut dividends when times are tough.

Diversifying across the fund smooths out a little of that, but investors still should be aware of the potential for volatility that comes with this high-yield ETF.

Learn more about SRET at the Global X provider site.

5 of 10

iShares Global Energy ETF

Oil rig
  • Assets under management: $1.4 billion
  • Dividend yield: 4.1%
  • Expenses: 0.46%

Though not as fashionable as financials or real estate, another sector that is typically much more generous when it comes to dividends is energy.

Sure, there is continued uncertainty for fossil fuel companies in the long-term as we look to a more sustainable global economy in the coming decades. But for older investors near retirement age, what happens over the next 20 or 30 years should not completely scare you off opportunities that could pay off nicely in the near-term – which, by the way, looks attractive right now.

"The global (energy) demand outlook has improved as the COVID-19 vaccine rollout has picked up speed recently and we get closer to a fully reopened economy," says Ryan Detrick, Chief Market Strategist for LPL Financial.

The iShares Global Energy ETF (IXC, $25.26) is a focused list of less than 60 big-name energy stocks, limited to the most established players, including Exxon Mobil (XOM), BP (BP) and other names you're undoubtedly familiar with. Some of these names were hit hard in early 2020 thanks to the big crash in oil prices but have recovered in recent months. This ETF in particular has enjoyed strong momentum over the past few months.

Once again, this is a sector bet, which means you're taking on additional risk by forgoing more diversified high-yield ETFs. But if you want to take a swing at energy and reap some income as well, IXC delivers.

Learn more about IXC at the iShares provider site.

6 of 10

Alerian MLP ETF

Oil pipeline
  • Assets under management: $5.0 billion
  • Dividend yield: 10.2%
  • Expenses: 0.87%

Just as you can supercharge your income by focusing on a smaller but higher-yield subsector of real-estate, investors can also supercharge their income with this focused energy fund.

The Alerian MLP ETF (AMLP, $31.24) invests in what are commonly known as master limited partnerships, or MLPs. These are special stocks that operate with a favorable tax structure thanks to the capital-intensive nature of their businesses, which commonly include energy storage and transportation.

Top holdings of AMLP include Energy Transfer LP (ET) and Plains All American Pipeline LP (PAA) – so-called "midstream" energy stocks because they neither drill new wells for energy or market finished products. Instead, these businesses just transport oil and gas via pipelines, store it in tanks and terminals, and otherwise connect the explorers with end-users and refineries.

Though more focused than a broad energy fund, in some way this business model is a bit less risky as it doesn't involve as much exposure to market prices for crude oil or natural gas as exploration-and-production firms. These MLPs tend to charge based on the volume they are moving or storing, so demand is important, but it avoids other outside factors affecting energy prices.

Learn more about AMLP at the ALPS Advisors site.

7 of 10

Amplify High Income ETF

Neatly rolled $1 bills
  • Assets under management: $312.2 million
  • Dividend yield: 9.6%
  • Expenses: 2.17%

First things first: This Amplify fund not only charges the greatest fee of the high-yield ETFs listed here, but it's one of the most expensive ETFs you'll find on Wall Street.

That said, it seemingly pays for itself via a high-yield strategy that delivers tremendous income – one that's very hard for the typical retail investor to independently replicate.

Specifically, the Amplify High Income ETF (YYY, $16.37) is a fund comprised of 30 other investment funds. That obviously adds an extra layer to fees, which is part of the reason the expenses are so high. However, if you are looking for a single holding to manage a wide array of high-yield investments so you don't have to, YYY is worth a look.

This ETF is comprised of 30 closed-end funds (CEFs), which actually trade more like stocks than ETFs in that they have a fixed number of shares. They also have other aces up their sleeve, such as being able to use debt leverage to double down on their investment theses. The current lineup of holdings includes tactical funds such as the BlackRock Resources & Commodities Strategy Trust (BCX) and the NexPoint Strategic Opportunities Fund (NHF).

Researching closed-end funds is no easy task, but YYY does the legwork for you to offer up a menu of high-yield opportunities it expects to do well. This is definitely a niche play, but is worth researching if you want alternative assets for income instead of mainstream bonds or dividend stocks.

Learn more about YYY at the Amplify provider site.

8 of 10

iShares Broad USD High Yield Corporate Bond ETF

Money raining from a city center
  • Assets under management: $7.6 billion
  • SEC yield: 4.0%*
  • Expenses: 0.15%, or $15 annually on every $10,000 invested

When most investors think about fixed-income strategies, they first think about the bond market. Unfortunately, bonds haven't been particularly generous in recent years thanks to an environment with chronically low interest rates. Even after a recent boom in yields, a 10-year U.S. Treasury bond still only offers a meager 1.55%.

To access higher yield, then, investors need to take on a bit more risk by looking beyond rock-solid government bonds and into the corporate sector, where loans extended to less-than-perfect companies can still command significant interest rates.

That's what iShares Broad USD High Yield Corporate Bond ETF (USHY, $40.89) – by focusing on high yield bonds, or "junk" bonds, in common parlance – can achieve.

USHY has a higher risk profile, to be sure, but it is a well-established fund with more than 2,000 individual bonds in its portfolio to ensure a good measure of diversification. Current positions include a juicy 11.5% loan to embattled cruise ship operator Carnival (CCL) and a loan to telecom T-Mobile US (TMUS) at 7.9%. Those are good examples of how bond offerings to less-stable corporations can command big-time yield.

* SEC yield reflects the interest earned after deducting fund expenses for the most recent 30-day period and is a standard measure for bond and preferred-stock funds.

Learn more about USHY at the iShares provider site.

9 of 10

Vanguard Emerging Markets Government Bond

Saudi Arabia
  • Assets under management: $2.7 billion
  • SEC yield: 3.5%
  • Expenses: 0.25%

If you'd rather not rely on struggling U.S. corporations, Vanguard Emerging Markets Government Bond (VWOB, $77.46) offers a decent alternative in the high-yield bond marketplace.

As the name implies, this fund targets sovereign debt of emerging market economies. That means that while there is a measure of certainty here, as all governments have a powerful revenue-generating tool in the ability to increase taxes, there is more risk and volatility than you'd see in established western economies.

Like the aforementioned corporate junk bond fund, VWOB looks to offset some of this risk through a deep and diversified array of some 760 sovereign debt holdings across nations like Qatar, Russia and Argentina. The fund also includes bond offerings to state-run outfits like oil giant Petroleos Mexicanos that are a bit more stable than traditional private firms, as they have government backing to keep them afloat if things get tough.

Learn more about VWOB at the Vanguard provider site.

10 of 10

Global X U.S. Preferred ETF

A man slides cash across a desk
  • Assets under management: $1.3 billion
  • SEC yield: 5.1%
  • Expenses: 0.23%

A sort of hybrid between stocks and bonds, preferred stock is far more stable in its share price than traditional common stock but tends to offer far higher yields than corporate bonds from the same entity.

The downside, of course, is that stability means you don't participate in the upside of common shares during a big rally like the one we saw across the end of last year. And while the yield is nice, preferred stock still is subordinate to traditional bonds in bankruptcy proceedings, so you could see significant losses in the event of default.

In a diversified income portfolio, however, preferred stock could fit in nicely. These shares aren't easy for individual investors to buy directly, but the Global X U.S. Preferred ETF (PFFD, $24.88) provides a simple one-stop shop for you to add a layer of preferreds to your holdings.

The portfolio is biased toward capital-intensive sectors that need to constantly raise money, such as utility stocks with high ongoing maintenance costs or financials that need deep pockets to fund multinational lending and investment operations of their own. However, with nearly 300 preferred stock holdings across established firms such as NextEra Energy (NEE) and Bank of America (BAC), there is a measure of stability despite a focus on a narrow part of the market.

Learn more about PFFD at the Global X provider site.

Sours: https://www.kiplinger.com/investing/etfs/602375/high-yield-etfs-for-income-investors
3 Best Dividend ETFs of 2021 (and 1 to Avoid)

Where did ours not disappear. The helicopter dived between the mountains, as if trying to dodge a bird or a rocket flying behind it. Below, wooded slopes skipped, some rivers sparkled in the sun with narrow winding bodies, suddenly turning out of the jungle.

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Sitting her down at the table and taking a notebook, he questioned her in detail, wrote it down and said: You, Galina. Go home. Don't kill yourself too much, your Kolka won't go anywhere, we'll find it.



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