Dividend income ETFs simplify stock investing and give you plenty of cash flow. These ETFs tend to have high yields and diversified portfolios that prioritize blue-chip stocks. Most of these same funds usually have low expense ratios and are passively managed. If you want high yields and a little bit of growth, you may want to consider these dividend income ETFs.
Vanguard High Dividend Yield Index Fund ETF
The Vanguard High Dividend Yield Index Fund (NYSEARCA:VYM) has a 2.45% SEC yield and a 0.06% expense ratio. The fund has more than 500 holdings and is diversified across several sectors, with financial and tech stocks making up almost 40% of its total holdings.
VYM has an annualized 12.5% return over the past decade, demonstrating that there is more to this fund than its high yield. It also has a bunch of dividend growth stocks in its top 10 holdings, such as Broadcom (NASDAQ:AVGO), JPMorgan (NYSE:JPM), and Walmart (NASDAQ:WMT). VYM then mixes it up with several high-yield stocks that produce respectable gains, but the stronger selling point for those stocks is their high dividends.
The majority of VYM’s capital goes toward large-cap stocks, especially value stocks. Only 7% of its holdings are in small cap stocks.
Schwab US Dividend Equity ETF
The Schwab US Dividend Equity ETF (NYSEARCA:SCHD) has a 3.81% SEC yield and a 0.06% expense ratio. The high yield also comes with an annualized 12.9% return over the past decade, but the returns have decelerated in recent years. The fund’s 7.7% return over the past three years highlights this trend, but SCHD still comes with relatively low volatility and high yields.
The fund holds roughly 100 stocks and places a strong focus on energy and consumer staples picks. Lockheed Martin (NYSE:LMT), Bristol-Myers Squibb (NYSE:BMY), and Chevron (NYSE:CVX) are the fund’s top three holdings. The top 10 stocks make up 41% of the fund’s total assets, but each of those picks has a strong say in the fund’s performance. Lockheed Martin currently makes up 4.55% of the fund’s total assets, while PepsiCo (NASDAQ:PEP), the 10th largest holding, makes up 3.75% of the fund’s portfolio.
SCHD prioritizes large cap value stocks, with more than half of its capital in that category. The fund does not invest in any growth stocks.
iShares Core High Dividend ETF
The iShares Core High Dividend ETF (NYSEARCA:HDV) has a 3.36% SEC yield and a 0.08% expense ratio. Its portfolio is filled with consumer staples and energy stocks, and that setup has produced annualized 10.0% returns over the past decade.
Exxon Mobil (NYSE:XOM), Chevron, and Johnson & Johnson (NYSE:JNJ) are the three largest positions, and they make up more than 20% of total assets. HDV is a more top-heavy fund, with 57% of its capital spread across 10 holdings in an 80 stock portfolio.
Just like the other high yield picks on this list, HDV emphasizes large cap value stocks, but this fund takes it to a more extreme measure. More than 70% of its holdings are specifically in large cap value stocks, with only 1% of its holdings in any type of growth stock. Stocks that are a blend of value and growth only make up 15% of the fund’s total assets. The heavy allocation toward value stocks minimizes volatility and contributes to the fund’s high yield.