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Dividend ETF’s: The Passive Way to Invest in Dividends
We’ve discussed the virtues of dividend investing and even highlighted a good place to start if you want to invest in individual stocks – the Dividend Aristocrats.
Next, I want to highlight a passive index style of dividend ETF investing.
ETF’s aim to follow the performance of an index. Like all ETF’s, dividend ETF’s typically carry low expense ratios. And there are ways to execute commission-free ETF trades through an online broker, so that you do not pay when you buy or sell an ETF.
You do lose a little bit of freedom in choosing individual stocks, but that might not necessarily be a bad thing, as most of us are horrible stock pickers.
The positives for ETF investing vs. individual stocks include:
- Instant diversification, which can be relatively important as some of the highest yielding dividend stocks are the riskiest.
- Lower trading fees vs. individual stock investing if you execute commission-free ETF trading.
- A passive index investing style – simply add to your position when you have additional funds.
- Less record keeping on dividends for tax purposes. Owning a few ETF’s cuts down on having to track dividend payouts on numerous stocks.
To get you started, I thought I’d create a list of some of the top dividend ETF’s on the market in to 3 separate categories – domestic, international, and sector. I’ll highlight the name, ticker, yield, and expense ratio of each. Note that the yields and expense ratios may change over time.
And remember, don’t simply chase yields!
Domestic Dividend ETF List
| Name & Focus | Ticker Symbol | Expense Ratio | 12-Month Yield |
|---|---|---|---|
| First Trust Morningstar Dividend Leaders ETF | FDL | 0.56% | 3.55% |
| First Trust Value Line Dividend ETF | FVD | 0.79% | 2.92% |
| Dow Jones Select Dividend ETF | DVY | 0.40% | 3.40% |
| iShares High Dividend ETF | HDV | 0.40% | 2.83% |
| Invesco Powershares Dividend Achievers ETF | PFM | 0.61% | 2.15% |
| Invesco Powershares High Yield Equity Dividend Achievers ETF | PEY | 0.62% | 3.74% |
| SPDR S&P 500 Dividend ETF | SDY | 0.35% | 3.34% |
| Vanguard Dividend Appreciation ETF | VIG | 0.13% | 2.13% |
| Vanguard High Dividend Yield ETF | VYM | 0.13% | 2.79% |
| WisdomTree Dividend ex-Financials ETF | DTN | 0.38% | 2.91% |
| WisdomTree Equity Income ETF | DHS | 0.38% | 3.75% |
| WisdomTree Large Cap Dividend ETF | DLN | 0.28% | 2.92% |
| WisdomTree Mid Cap Dividend ETF | DON | 0.38% | 3.04% |
| WisdomTree Small Cap Dividend ETF | DES | 0.38% | 3.88% |
| WisdomTree Total Dividend ETF | DTD | 0.28% | 2.68% |
International Dividend ETF List
I’ve discussed why international diversification is important vs. putting all of your eggs in the U.S. domestic basket.
To that end, there are a number of international and emerging marketing dividend ETF’s to choose from.
| Name & Focus | Ticker Symbol | Expense Ratio | Annual Yield |
|---|---|---|---|
| iShares Dow Jones International Select Dividend Index Fund | IDV | 0.50% | 5.30% |
| Invesco Powershares International Dividend Achievers ETF | PID | 0.58% | 3.40% |
| SPDR S&P International Dividend ETF | DWX | 0.45% | 7.80% |
| WisdomTree International Dividend ex-Financials ETF | DOO | 0.58% | 5.00% |
| WisdomTree Dividend of Europe, Far East Asia, Australasia ETF | DWM | 0.48% | 4.22% |
| WisdomTree International LargeCap Dividend ETFText of link | DOL | 0.48% | 3.16% |
| WisdomTree International MidCap Dividend ETF | DIM | 0.58% | 7.56% |
| WisdomTree International SmallCap Dividend ETF | DLS | 0.58% | 6.73% |
| WisdomTree Japan SmallCap Dividend ETF | DFJ | 0.58% | 5.93% |
| WisdomTree Emerging Markets SmallCap Dividend ETF | DGS | 0.64% | 4.28% |
| EGShares Low Volatility Emerging Markets Dividend | HILO | 0.85% | 5.38% |
| Global X SuperDividend ETF | SDIV | 1.14% | 6.58% |
Sector High Dividend ETF List
There are also a number of sectors that inherently have high dividend payouts – real estate, government and corporate bonds, telecom, and utilities. Here are a few of the most popular dividend ETF’s that cover these sectors.
| Name & Focus | Ticker Symbol | Expense Ratio | Annual Yield |
|---|---|---|---|
| Global X Permanent ETF (25% Stock, Long-Term Bond, Short-Term Bond, Gold/Silver) | PERM | 0.49% | n/a |
| iShares Barclays TIPS Bond ETF (Treasury Inflation Protected Securities) | TIP | 0.20% | 2.22% |
| iShares FTSE NAREIT Mortgage Plus Capped ETF | REM | 0.48% | 11.47% |
| VanEck Market Vectors Mortgage REIT Income ETF | MORT | 0.52% | n/a |
| SPDR Barclays Capital High Yield Bond ETF | JNK | 0.40% | 7.15% |
| Vanguard REIT ETF | VNQ | 0.10% | 3.35% |
| Vanguard Long-Term Corporate Bond ETF | VCLT | 0.14% | 4.33% |
| Vanguard Telecommunication Services ETF | VOX | 0.19% | 3.35% |
| Vanguard Utilities ETF | VPU | 0.19% | 3.79% |
Dividend ETF Discussion:
- What are your favorite dividend ETF’s?
- Do you own any of these ETF’s?
- Do you prefer buying dividend ETF’s vs. dividend stocks?
Dividend ETF’s: The Passive Way to Invest in Dividends is copyrighted by 20somethingfinance.com without consent to republish.
2012-08-23 14:48:55
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