2 ETFs That Are Too Cheap to Ignore

The popularity of exchange-traded funds (ETFs) has changed investing today. With over 4,000 U.S.-listed ETFs, the competition is intense. Investors can pick from globally diversified ETFs for an expense ratio as low as 0.03%. There are several ETFs marking their presence in the industry, which has created a battle for issuers and an opportunity for investors.

While it may not be easy to choose between funds, you can compare the expense ratio, performance, and cost of the ETF when picking one. However, this doesn’t mean you should compromise on the quality of the funds. While fee comparison is important, you also need to look at the portfolio and historical performance. If you’re starting over this year and have a limited budget to invest, here are 2 top-quality ETFs that are too cheap to ignore. 

Schwab US Dividend Equity ETF

An excellent fund by Schwab, the Schwab US Dividend Equity ETF (NYSEARCA:SCHD) tracks the Dow Jones U.S. Dividend 100 Index. The fund employs a screening process and picks 100 financially stable dividend stocks that have a history of growing dividends. It has an expense ratio of 0.06% and an attractive yield of 3.7%.

It starts by identifying companies that have raised dividends for at least 10 years and then creates a composite score looking at the dividend yield, return on equity, cash flow to debt, and a 5-year dividend growth rate. Based on this, the companies with the highest scores are included in the ETF. It has a 14-year track record and can easily beat the S&P 500’s yield of 1.2%. 

Its aim is to invest in companies that are financially strong, have rewarded investors and have growing dividends. If this is what you’re looking for, SCHD is an ideal choice.  It has $72.5 billion in assets under management. The ETF has a basket of 102 dividend stocks and is heavily invested in the energy sector (19.3%), consumer staples (18.5%), and healthcare (16.1%). 

Its top holdings include ConocoPhillips, Bristol Myers Squibb, and Merck & Co. Besides the dividends, SCHD has provided investors with capital appreciation. The fund has gained 4.5% in a year and is exchanging hands for $28.55. SCHD is a highly sought-after ETF that offers the right mix of income and capital appreciation. A low expense ratio, low NAV, and high yield make SCHD an excellent ETF to add to your portfolio. 

Fidelity High Dividend ETF

Another great dividend ETF by Fidelity, the Fidelity High Dividend ETF (NYSEARCA:FDVV) aims to reflect the performance of the Fidelity High Dividend index. It invests in large- and mid-cap companies that have a strong dividend history and an ability to sustain the dividends. The fund uses a “smart beta” method to evaluate the holdings based on the dividend growth rate, dividend yield, and payout ratio. It then chooses the best companies from the index. 

The ETF has a yield of 2.76% and an expense ratio of 0.15%. It has the highest allocation to the technology sector (26%), financials (21%), and consumer staples (12%). As the tech sector continues to rally, you’ll benefit from the top holdings. And even if it doesn’t rally, you’ll benefit from the traditional dividend payers. 

FDVV has $7.98 billion in assets under management and holds 123 stocks. Its top 10 stocks make up 34% of the portfolio. The top 10 holdings are tech giants such as Nvidia, Microsoft Corporation, Apple Inc., and Broadcom. It also includes dividend companies such as Philip Morris, Exxon Mobil, and Bank of America. The ETF has generated a 5-year average annual return of 16.34%. 

FDVV has gained 15.61% in a year and is exchanging hands for $57.18 as of writing. Besides offering fast dividend growth, the fund also offers capital appreciation. Most of the upside is driven by Nvidia, which is one of the most important holdings in the fund. However, it also invests in consumer staples, which bring stability and steady dividends for investors. 

FDVV is a great way to get access to the top dividend stocks at low risk.