For many, investing is about staying in for the long haul, especially if you want to generate a lifetime stream of income that will support you well into retirement. To reach this goal, many savvy investors turn to dividend paying stocks. These are stocks of companies that make regular payments to investors out of their profits. But you can also turn to dividend paying ETFs. These are diversified funds that can hold hundreds of dividend paying stocks hand picked by professionals from big names like JP Morgan and Blackrock.
But there are also tons of dividend paying ETFs out there. And their yields vary. Some have low yields, while others have much higher yields. So to narrow down your search, we tracked down 5 dividend ETFs that pay 5%+ yields and can have a nice spot in a long term investor’s portfolio.
So let’s take a closer look.
Global X SuperDividend U.S. ETF (DIV)
Global X SuperDividend U.S. ETF (DIV) is a popular dividend paying ETF among investors. It generates an impressive yield of over 7%. It does this by investing in 50 of the highest dividend paying stocks in the United States. But its fund managers go beyond just picking dividend stocks with high yields. They also screen for stocks with low betas compared to the S&P 500. This can give investors the benefit of low volatility.
Moreover, the fund has net assets of over $657 million. And it’s delivered a five year return of around 2%. Plus, it also has a competitive expense ratio of 0.45%.
iShares Preferred and Income Securities ETF (PFF)
The iShares Preferred and Income Securities ETF (PFF) invests in preferred stocks with an aim to capture returns similar to high yield bonds combined with growth potential. Preferred stocks also generally have higher yields than common stocks, making this fund popular among income seeking investors.
This ETF has a large weighting in financial institutions with more than 65 percent of its holdings resting in that sector. But it also has a significant exposure to the industrial and utilities sectors. Utilities are often seen as a defensive sector, meaning it is generally known to remain resilient even in times of market downturns.
Moreover, the PFF holds net assets of more than $14 billion. And it has a competitive expense ratio of 0.45%.
Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD)
The Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD)
The XSHD invests in 60 companies in the S&P SmallCap 600 Low Volatility High Dividend Index. These stocks have generally been known to offer high yields as well as experiencing less volatility, potentially making it suitable for low risk investors. This ETF and its corresponding invex are rebalanced and reconstituted semi annually on the last business day in January and July. It generates a high yield of more than 6%. It is largely concentrated in real estate including real estate investment trusts (REITs). These are companies that invest across a variety of income generating real estate like apartments and shopping centers. And it has a slightly lower expense ratio than other funds on this list at 0.30%. Additionally, this ETF holds net assets of around $70 million.
JPMorgan Equity Premium Income ETF (JEPI)
The JPMorgan Equity Premium Income ETF (JEPI) functions a bit differently than other ETFs on this list. It generates income by investing in large cap U.S. stocks and selling options. It generates a yield of more than 8% and has earned a Morningstar Medalist Rating of Silver. Moreover, it screens for stocks with low volatility and uses a proprietary research strategy to find over and undervalued stocks with attractive risk/return
profiles. The fund is highly concentrated in communications services, consumer discretionary and consumer staples. And its top holdings include some tech giants of the so called Magnificent Seven. In addition, the fund holds net assets of more than $41 billion. And it offers a competitive expense ratio of 0.35%.
Global X SuperDividend ETF (SDIV)
Those looking for international exposure may want to look into the Global X SuperDividend ETF (SDIV). This is the global cousin of DIV. And it generates an impressive yield of more than 9%. SDIV invests in 100 of the highest yielding stocks from around the globe. And it has maintained a strong track record, paying monthly distributions for the past 14 years. It tracks the Solactive Global SuperDividend Index. It’s primarily concentrated in the financials, energy, materials and real estate sectors. In addition, the fund holds net assets of more than $1 billion. But it has a slightly higher expense ratio than the other funds on our list at 0.58%.