One great way to invest in many different stocks at the same time is via an ETF. If you buy a Vanguard S&P500 ETF (VOO), your returns will be almost the same as you bought the shares of all the S&P500 companies according to their index weight. All this with one purchase, one time transaction costs and as low as a yearly 0.05% fee. As a bonus, it currently has a 2% dividend yield. Nevertheless if you are looking for ETFs that solely hold dividend paying shares, here are 4 great ones to consider including in your early retirement portfolio:
Vanguard Dividend Appreciation ETF (VIG)
This ETF tracks the performance of the NASDAQ US Dividend Achievers Select Index, which consists of companies with a continuous dividend growing record over the last 10 years. It currently yields around 2.2% and the annual expense ratio is a super low 0.09%. The top 5 holding of the fund are Johnson & Johnson, PepsiCo, Microsoft, Coca-Cola and Medtronic, which overall represent nearly 19% of the whole ETF.
Vanguard High Dividend Yield ETF (VYM)
Another Vanguard ETF with a different investment strategy and a nice 3% dividend yield which is paid out on a quarterly basis. The fund takes all US dividend payers, takes the highest yielding half and weights the companies based on their market capitalization. All for an equally low 0.09% expense ratio. It’s top holdings are Microsoft, Exxon Mobil, Johnson & Johnson, General Electric and AT&T.
iShares Select Dividend ETF (DVY)
Currently this is the highest yielding (3.16%) ETF from the four listed in this post, but also comes with the highest expense ratio (0.39%). It consists 100 US stocks with at least of 5 years of non negative dividend growth record whereby the dividend coverage ratio is greater or equal to 167%. 14% of the fund’s holding consists of Lockheed Martin, CME Group, Chevron, ONEOK ascend Philip Morris, but from an industry perspective currently utilities have the largest ratio in it.
SPDR S&P Euro Dividend Aristocrats ETF (SPYW)
Finally a dividend ETF from Europe in order to add some geographic diversification to this post. It holds stable dividend paying companies from the euro zone. Currently French and German companies represent over 50% of its holdings. It has a 0.3% expense ratio and a nice 2.9% dividend yield, which unlike the other 3 ETFs is being paid twice per year. The top five holdings are: EDP – Energias de Portugal, SES SA, Koninklijke Boskalis Westminster, Konecranes Oyj and Muenchener Rueckversicherungs AG.
Do you have an ETF to recommend? Feel free to share at the comments!