If you’re a decade shy of clocking in one last time and stepping into retirement, you probably feel excited. After years of hard work, you’re finally ready to step into your Golden Years.
But the next 10 years are crucial. You’re going to want to make sure your savings pull you through your entire retirement. The average retirement can span 20+ years.
As far as your investments go, you’re going to want to balance income with capital appreciation. Many investors do this by investing in dividend-paying ETFs. But it can be difficult to pick the right dividend ETFs.
So to help you out, we devised a list of dividend ETFs that we believe could fit well in the portfolio of someone 10 years from retirement.
So let’s take a deeper dive.
JPMorgan Equity Premium Income ETF (JEPI)
The JPMorgan Equity Premium Income ETF (JEPI) stands out for its ultra-high yield of 8.35%, which can make it a very attractive option for those near or in retirement.
Now, many experts suggest that unusually high yields can be red flags. But JEPI has more going for it. In fact, it has earned a Morningstar Silver medalist rating.
And this actively managed fund is a bit different than your average dividend ETF. JEPI takes a dual approach to generating income. It invests in large-cap stocks with low volatility. And it also sells options. Plus, its fund managers use proprietary research to identify over-and undervalued stocks with attractive risk/return profiles.
Additionally, JEPI is heavily invested in the information technology sector, which has been growing with the artificial intelligence (AI) movement. Many of its top holdings are members of the so-called Magnificent Seven. And it has delivered a five-year return of around 6.74%.
But being an actively managed fund, it has a slightly higher than average expense ratio of 0.35%. Still, it may help those near retirement generate strong dividend income over time.
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) looks for more than just stocks with high yields. It also filters out those high-yielding stocks with high volatility. So it ultimately aims to give you reliable income while mitigating risk. This is essential for those nearing retirement.
SPHD currently pays a yield of just over 4%. And it has maintained a five-year return of over 31%.
Among its top holdings are companies in real estate as well as the defensive sectors of consumer staples and utilities. Defensive sector stocks are generally considered to remain stable under various market conditions.
SPHD has an expense ratio of 0.30%.
Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF (SCHD) has become a core component of many investors’ portfolios. SCHD could deliver income and capital appreciation by investing in stocks screened for financial strength and consistency in paying out dividends. Moreover, SCHD shines for its low expense ratio of 0.06%. And it has a five-year return of around 40%.
SCHD is mainly invested in energy, consumer staples and healthcare. The latter two are also defensive sectors.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (VYM) gives you exposure to more than 500 high-quality stocks which are forecasted to deliver above average yields. This could give investors a reliable stream of income. VYM has a yield of around 2.44%. And it has maintained a five-year return of nearly 65%. So it could also have strong growth potential.
VYM is heavily concentrated in the financials, technology and industrials sectors. Vanguard is recognized to offer funds with industry-beating fees. And VYM has an expense ratio of just 0.06%.
Vanguard Dividend Appreciation ETF (VIG)
With ultra-low fees, the Vanguard Dividend Appreciation ETF (VIG) provides investors access to more than 300 companies expected to increase their dividends year over year.
VIG has a yield of about 1.62% and a five-year return of over 63%. It’s mainly invested in the information technology, financials and healthcare sectors. And you get all this for the low expense ratio of just 0.05%.
iShares Core High Dividend ETF (HDV)
The iShares Core High Dividend ETF (HDV) offers a relatively high yield of around 3.22% and has delivered a five-year return of over 52%. This could help you target growth and income.
The fund focuses on 75 stocks of financially healthy companies. Its top holdings are in the consumer staples, energy and healthcare sectors. And HDV also has a competitive expense ratio of 0.08%.
ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) invests in companies that have increased their dividends for at least 25 years. And it also screens companies for strong fundamentals. This could give investors stability and peace of mind, as well as a stream of income that could potentially grow over time.
Among its top holdings are companies in the industrials, consumer staples and financials sectors. NOBL has a yield of about 2.14% and has a five-year return of over 40%.