Exchange-traded funds (ETFs) are a great passive investment vehicle. They hold a basket of stocks and other investments that provide diversification and help reduce risk. So you don’t have to spend time managing these investments.
Many ETFs are designed to generate income, making them ideal investments for those seeking a portfolio that provides reliable passive income. of Vanguard High Dividend Yield ETF (VYM -0.10%) and iShares Preferred and Income Securities ETF (PFF -0.18%) these two are excellent Dividend ETF.
Not just dividend income
Vanguard High Dividend Yield ETF focus on retaining general stock higher than average dividend yield. The fund currently offers a yield of approximately 2.7%. — More than twice the average yield S&P500hovered Recently it is around 1.2%.
To put this into perspective, if you invest $1,000 in this ETF, you’ll receive about $27 in dividend income each year. This equates to about $12 in dividend income from an ETF tracking the S&P 500. This ETF is higher than that A low-cost source of income. the expense ratio 0.06%, mean it We charge investors an annual fee of $0.60 for every $1,000 invested in the Fund.
The fund’s portfolio currently includes 536 stocks, with a heavier allocation to its top holdings. 5 people maximum The locations are:
broadcom (4.4% of fund assets): Dividend yield 1.3%.
JP Morgan Chase (3.6%): Yield 2%.
exxon mobil (3%): Yield 3.4%.
home depot (2.2%): Yield 2.1%.
procter and gamble (2.2%): Yield 2.3%.
These top five companies account for more than 15% of total assets. However, it’s worth noting that these are some of the highest quality dividend stocks in the world. they have long stripes We are increasing dividends, strong Financial profile.
Dividend growth is important. This allows the fund to distribute more income to investors each year. Additionally, the fund’s price has a fairly consistent upward trend over time.
VYM data by YCharts.
While past performance is no guarantee that this fund will continue to generate increased dividend income in the future, its high concentration in top-quality, high-yielding dividend stocks bodes well for the future. It must be able to provide investors with an increased source of income while increasing the value of their investments.
High yield and relatively stable source of income
Owned by iShares Preferred and Income Securities ETFs preferred stock and hybrid securities. These investments behave like a combination of bonds and stocks. They tend to have higher fixed dividends and are a riskier investment than bonds, but not as risky as common stocks.
This ETF has a yield of about 6%, which is much higher than the Vanguard fund. Make a monthly distribution. The expense ratio is also high at 0.46%.
The fund currently holds 441 stocks, most of which are preferred stock positions issued by major financial institutions. wells fargo, citygroupJ.P. Morgan. Financial institutions account for nearly 75% of the portfolio. The fund also owns preferred and hybrid securities of industrial companies (approximately 16%) and utility companies (approximately 10%).
The fund’s monthly payments tend to be relatively stable.
PFF data by YCharts.
Similarly, as the chart shows, the price of the fund is Also It tends to be relatively stable. Changes in interest rates are the main factor affecting prices. As interest rates rise, the value of a fund’s holdings tends to fall, increasing its income yield. This is because preferred stocks are riskier than bonds. Higher yields allow investors to take on more risk.
purely passive income
Vanguard High Dividend Yield ETF and iShares Preferred and Income Securities ETF are great for generating passive income. The Vanguard High Dividend Yield ETF provides a steadily increasing income stream, and the iShares Preferred and Income Securities ETF provides a relatively fixed stream of passive income with a high yield. The funds are wonderful A tandem that generates income.
Citigroup is an advertising partner of Motley Fool Money. Wells Fargo is an advertising partner of The Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Matt DiLallo has held positions at Broadcom, Home Depot, and JPMorgan Chase. The Motley Fool has positions in and recommends Home Depot, JPMorgan Chase, and Vanguard Whitehall Funds Vanguard High Dividend Yield ETF. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
