Investing $7,500 in Dividend ETFs Could Potentially Set You on the Path to Achieving Millions
In the world of investing, high-yield dividend-focused Exchange-Traded Funds (ETFs) can be a great choice for those seeking sustainable income and long-term growth. Here are some notable options:
The Schwab US Dividend Equity ETF (SCHD) offers a dividend yield of approximately 3.9%, focusing on companies with strong financial performance and sustainable dividends. Its top holdings include Amgen, PepsiCo, Chevron, and ConocoPhillips. With an expense ratio of 0.06% and approximately $71.4 billion Assets Under Management (AUM), SCHD is a popular choice among investors.
The First Trust Morningstar Dividend Leaders Index Fund (ticker FDL) provides a high 30-day SEC yield around 4.41%, targeting high-quality dividend-paying stocks.
Fidelity High Dividend ETF (FDVV) yields approximately 2.95%, and uses criteria like payout ratio and dividend growth to select financially healthy, high-yield companies. FDVV has shown good performance in stressed markets due to its focus on quality.
Vanguard High Dividend Yield ETF (VYM) offers about 2.6% yield with a broad portfolio of high-dividend U.S. stocks excluding REITs. Top holdings include Broadcom, JPMorgan Chase, Exxon Mobil, and Walmart. VYM has a very low expense ratio of 0.06% and $75.6 billion in assets.
SPDR S&P Dividend ETF (SDY) has a dividend yield around 2.57%, focusing on high-yield dividend stocks by tracking the S&P High Yield Dividend Aristocrats Index.
These ETFs balance dividend yield with quality metrics like profitability, dividend growth, and financial health to provide sustainable income and long-term growth potential. Lower expense ratios and large assets under management reflect broad investor support and cost efficiency. SCHD and Fidelity High Dividend ETF particularly stand out for their higher yields and quality-focused approach, making them strong candidates for long-term dividend investors.
Historically, dividend-paying stocks have outperformed non-dividend stocks in terms of average annual total return, with dividend growers and initiators having a 10.24% average return. It's especially powerful to invest in companies that regularly increase their payouts.
Other dividend-focused ETF options include the JPMorgan Equity Premium Income ETF, iShares Preferred & Income Securities ETF, Schwab U.S. Dividend Equity ETF, Fidelity High Dividend ETF, Vanguard High Dividend Yield ETF, SPDR S&P Dividend ETF, iShares U.S. Real Estate ETF, iShares Core Dividend Growth ETF, Vanguard Dividend Appreciation ETF, and First Trust Rising Dividend Achievers ETF.
Dividend-paying stocks tend to be sturdier due to the requirement of a certain size and dependable income. They continue to pay during economic downturns, making them a reliable source of income for long-term investors.
By parking meaningful sums in one or more of these dividend-focused ETFs, you can build respectable wealth over many years. Dividends can be reinvested in more stock, compounding your returns over time. With enough time, saving, and investing, one can become a millionaire, if not a multimillionaire, through dividend investments.
It's recommended to read up on the JPMorgan Equity Premium Income ETF if you're intrigued, as its high yield has drawn plenty of interest. However, always do your own research and consider your investment goals and risk tolerance before making any investment decisions.
Personal finance management involves considering various investment options for long-term growth and sustainable income, such as investing in high-yield dividend-focused Exchange-Traded Funds (ETFs). For instance, the Schwab US Dividend Equity ETF (SCHD) and Fidelity High Dividend ETF (FDVV) are notable choices, offering yields of approximately 3.9% and 2.95%, respectively. Money management also requires an understanding of the importance of dividend-paying stocks, as they tend to be more resilient during economic downturns and have historically outperformed non-dividend stocks in terms of average annual total return. A strategic approach to personal-finance, therefore, involves allocating funds to such ETFs for wealth creation over time, with dividends serving as a means to compound returns. It's crucial to conduct thorough research before making any investment decisions, considering one's investment goals and risk tolerance.
