15 High-Dividend ETFs with Low Cost

If you are an investor looking for a steady income, then you are better off investing in high-dividend ETFs rather than dividend stocks. They are easier to invest in and expose you to a wide array of stocks.

In this article, we look at 15 high-dividend ETFs that you can invest in today. Let’s get into it!


How do ETF dividends work?

Primarily, ETFs focus on growth investing and index-tracking. There are however others that allow shareholders to own stocks that pay dividends. Such stocks collect the dividends and distribute them among shareholders.

This can be through cash or reinvesting in an investor’s ETFs. So, how are dividends allocated?

· Allocation of dividends

Say there are 100 shares of a particular ETF outstanding, and as an investor, you own 10 shares. This will equate to 10% of the total dividends the ETF has earned. On the other hand, if the ETF consists of four dividend-paying underlying stocks, the dividends will be distributed among the shareholders on a per-share basis.

· Timing of payments

So how are ETF dividends paid out? Well, payment is determined by the ex-dividend date, record, and payment date. These dates also determine who gets paid and are different from those of the underlying stocks. Besides, each ETF has a different payment schedule. Fortunately, the dates are accessible through the fund’s prospectus websites.

· Types of dividends paid out

There are primarily two types of dividends that an ETF can pay its investors. They are:

Qualified dividends: these are dividends that fall under capital gains tax rates. The payee must also hold the stock for more than 60 days before the ex-dividend date.

Nonqualified/ordinary dividends: they are the most common and are taxed at a payee income tax rate.


Top 15 high-dividend ETFs

ETF

Symbol

SEC Yield

Expense Ratio

Vanguard High Dividend Yield

VYM

3.22%

0.06%

iShares Select Dividend Index

DVY

4.61%

0.39%

SPDR S&P Dividend ETF

SDY

3.44%

0.35%

iShares Core High Dividend ETF

HDV

4.67%

0.08%

Vanguard Dividend Appreciation

VIG

1.98%

0.06%

Invesco Zacks Multi-Asset Income

CVY

6.43%

0.97%

Invesco KBW High Dividend Yield Financial Portfolio

KBWD

1.54

1.58%

ALPS Sector Dividend Dogs

SDOG

4.33%

0.40%

Schwab US Equity Dividend

SCHD

3.01%

0.06%

WisdomTree U.S. SmallCap Dividend Fund

DES

3.33%

0.38%

First Trust Morningstar Dividend Leaders Index Fund

FDL

5.07%

0.45%

Virtus WMC International Dividend

VWID

5.52%

0.49%

Xtrackers MSCI EAFE High Dividend Yield Equity

HDEF

5.38%

0.20%

Global X MSCI SuperDividend EAFE

EFAS

7.26%

0.56%

Global X SuperDividend

SDIV

10.37%

0.59%

Here are the 15 most popular high-dividend ETFs you can invest in.

1. Vanguard High Dividend Yield (VYM)

The Vanguard High Dividend Yield is a beginner-friendly, low-cost, and high-dividend ETF that is ideal for all traders. The ETF tracks the FTSE High Dividend Yield Index. It consists of more than 400 stocks that are taunted as the most tradable stocks. Besides, it has a technological edge compared to its competitors since it focuses on forecasts of future dividends.

2. iShares Select Dividend Index (DVY)

The DVY is one of the popular domestic ETFs. It also focuses on smaller companies and tracks at least 90 stocks index. Its portfolio includes utility companies, industrial stocks, non-cyclical, cyclical, and financials. The yield of the DVY is capped at 4.61% while the expenses are capped at 0.39%.

3. SPDR S&P Dividend ETF (SDY)

The SPDR S&P Dividend ETF is regarded as one of the best ETFs you can buy stocks from. It has a broad portfolio giving you a wide range of options. It tracks the S&P High Yield Dividend Aristocrats Index that consists of companies that have a proven track record of paying dividends in the past 20 years. It has an expense ratio of 0.35% and a yield of 3.44%.

4. iShares Core High Dividend ETF (HDV)

The iShares Core High Dividend ETF is another ETF that comprises companies that are less risky to invest in. its portfolio is smaller compared to the DVY and exposes you to approximately 75 dividend-paying stocks. The ETF tracks an index constructed by Morningstar. It has a 4.67% SEC yield and a 0.08% expense ratio.

5. Vanguard Dividend Appreciation (VIG)

The Vanguard Dividend Appreciation comprises companies that are financially healthy and are known to increase their dividends year over year. It tracks the Nasdaq-constructed U.S. Dividend Achievers Select Index that has over 182 high-dividend stocks. Some of the behemoth companies include Microsoft Corp. (MSFT). It has a relatively low expense ratio of 0.06% and an SEC yield of 1.98%.

6. Invesco Zacks Multi-Asset Income (CVY)

This ETF will have you pay higher for higher yields. It is based on the Zacks Multi-Asset Index. This index comprises 149 domestic and international companies' stocks that pay dividends. The CVY SEC yield stands at 6.43% while the expense ratio is 0.97%. 86.7 assets are in the United States while the rest are distributed between Africa, Europe, Japan, Asia, Latin America, and the United Kingdom.

7. Invesco KBW High Dividend Yield Financial Portfolio (KBWD)

This is yet another high-dividend ETF that primarily focuses on companies in the financial sector. It tracks the KDW Nasdaq Financial Sector Dividend Yield Index. Some of its notable holdings include ARMOUR Residential REIT (ARR), Annaly Capital Management Inc (NLY), and New Mountain Finance Corp (NMFC), among others. Its portfolio is made up of domestic companies.

8. ALPS Sector Dividend Dogs (SDOG)

The ALPS Sector Dividend Dogs tracks the S-Network Sector Dividend Dogs Index. The stocks must be part of the S&P 500 Index which is taunted as the largest U.S. benchmark Index. It mostly consists of large value stocks from holdings such as Invesco Ltd (IVZ), Centerpoint Energy Inc. (CNP), and People’s United Financial Inc (PBCT), among others. The companies are mostly United States and Asia-based.

9. Schwab US Equity Dividend (SCHD)

The SCHD EFT also consists of low-cost yet high-paying dividends from a wide range of companies. It is based on the Dow Jones U.S. Dividend 100 Index that comprises financially healthy companies. It spans companies in the energy, financial, healthcare, industrial, and other industries. These companies are mostly in Europe and the United States. Some of its top holdings are Pepsico Inc. (PEP), Coca-Cola Co (KO), and Qualcomm, Inc. (QCOM).

10. WisdomTree U.S. SmallCap Dividend Fund (DES)

Unlike other ETFs on this list, the WisdomTree U.S. SmallCap Dividend Fund focuses on small-cap dividend stocks. It tracks the WisdomTree SmallCap Dividend Index that consists of companies found at the bottom of the Index. It has more than 700 holdings among them Chemours Company (CC), Antero Midstream Corp (AM), and B&G Foods, Inc (BGS).

11. First Trust Morningstar Dividend Leaders Index Fund (FDL)

This EFL solely focuses on companies that have a reputable record of paying dividends. It comprises 100 holdings and is known to exclude and REITs and under-weight tech companies. It only tracks companies with a dividend that is higher than it was five years ago. Some of its holdings include Abbvie Inc, (ABBV), Verizon Communications Inc (VZ), and Citigroup Inc (C).

12. Virtus WMC International Dividend (VWID)

The VWID mainly focuses on equity securities of markets that fall under the ex-US region. The holdings are in different industries such as energy, healthcare, real estate, technologies, utilities, and more. It is managed by Wellington Management Company LLP and Virtus ETF Advisers LLC. Some of its notable holdings are Rodgers Corp. (ROG) and Enbridge Inc (ENB).

13. Xtrackers MSCI EAFE High Dividend Yield Equity (HDEF)

This is yet another high-dividend EFT that comes at a low price. It mainly invests in developed markets in the ex-US region. This ETF is based on MSCI’s EAFE index that has a robust representation of global markets. Notable holdings are Alibaba Group Holding Ltd (ADR BABA) and Rogers Corp. (ROG). Its expense ratio is 0.41%.

14. Global X MSCI SuperDividend EAFE (EFAS)

This EFT comprises of companies that show an improvement in financial management, governance, and social issues. Such companies also tend to withstand changes in ESG events. Its top countries include the United Kingdom, Spain, and Australia while the top sectors are financials, energy, and industrials.

15. Global X SuperDividend (SDIV)

Finally, we have the SDIV ETF, which is among the most popular stocks in the global equity market. Unlike most ETFs on this list, it also includes REITs and bets, plus small firms that would otherwise be ignored by major benchmarks. Some of its holdings include Evraz PLC, Zenith Bank PLC, and B & G Foods, Inc., among others.

How to invest in dividend ETFs

As you can see, ETFs expose you to a wide array of options. And this, means there are minimal risks when you invest in such stocks. So how do you go about making the right investment decision?

· Pick a diverse ETF

Such an ETF will provide you with hundreds of dividend stocks to choose from. An ideal place to do your research is on your broker’s website. It is recommended you go for low-cost ETFs especially those in the S&P 500 stock index.

· Research about the ETF

You do not want to invest in an ETF that invests in bonds, rather, choose those that focus on equities (stocks). Also, consider the dividend, returns in the past five years, expense ratio, and stock price.

· Purchase the ETF

Once satisfied you can buy the ETF online through your broker’s website.