Are you looking for ETFs instead of stocks that pay fat dividends?
Look no further.
The ETF landscape is wide enough now that you don’t have to venture into individual equities to get a diversified basket of high dividend yield stocks.
Today, there are ETFs that do just that, and the following 5 are some of the highest-yielding of the bunch.
If you’re an income investor, your primary concern is finding solid investment vehicles paying out impressive high dividend yields. Sure, there are a lot of individual stocks in the market that pay high dividends but trying to determine which stocks are best is often a trying task.
Fortunately, the exchange-traded fund (ETF) landscape is wide enough now that you don’t have to venture into individual equities to get a diversified basket of high dividend yield stocks.
Today, there are many ETFs that pay fat dividends, and the following five are the highest-yielding of the bunch.
Invesco Preferred Portfolio ETF (PGX)
Topping our list of high dividend yield ETFs is the Invesco Preferred Portfolio ETF (PGX). This fund seeks investment results that correspond generally to the price and yield performance of an index called The BofA ML Core Fixed Rate Preferred Securities Index. Basically, with PGX you own preferred stock in some of the best financial companies around, including Broadcom (AVGO), JP Morgan Chase & Co. (JPM) and Capital One (COF). As of March 31, the annual dividend yield on PFF was 5.10%.
SPDR Wells Fargo Preferred Stock (PSK)
In second place is the SPDR Wells Fargo Preferred Stock (PSK). This fund seeks to replicate as closely as possible the total return of the Wells Fargo Hybrid and Preferred Securities Aggregate index. As of March 31, the annual dividend yield on PFF was a nice 4.99%.
iShares Preferred and Income Securities ETF (PFF)
In second place Coming in third on our list of top-yielding dividend ETFs is the iShares S&P U.S. Preferred Stock Index (PFF). This fund seeks to track the price and yield performance of the ICE Exchange-Listed Preferred and Hybrid Securities Index. Preferred shares held in this ETF include Citigroup (C), General Motors (GM) and Bank of America (BA) among many other stellar dividend payers. As of March 31, the annual dividend yield on PFF was 4.86%.
As you can see, all three of our top-yielding ETFs hold preferred shares. The key difference between preferred stock and common stock is that similar to bonds, the primary source of return in preferred stock is usually generated by a fixed dividend payment that must be paid out before dividends to common stockholders. The structure of preferred shares is one reason why the top three dividend-yield ETFs all feature preferred stock.
SPDR S&P 500 High Dividend Fund (SPYD)
Why not take the broad market for a high yield fund. The SPDR S&P 500 High Dividend Fund (SPYD) tracks the S&P 500 High Dividend Index. Of course, it invests across diversified sectors and dividend paying stocks of companies. Holdings include some of the top dividend S&P 500 companies including Seagate Technology (STX), Valero Energy (VAL) and Hewlett Packard Enterprise (HPE). As of March 31, the annual dividend yield of SPYD was 4.83%.
WisdomTree U.S. High Dividend Fund (DHS)
Rounding out our top-five list is the WisdomTree U.S. High Dividend Fund (DHS). Appropriately, this ETF seeks to track the price and yield performance of the WisdomTree Equity Income index. That index tracks many of the biggest large-cap stocks in the market today, including AT&T (T), Philip Morris (PM), IBM (IBM) and AbbVie (ABBV). With DHS, you get the best of the best in dividend paying common stock. As of March 31, the annual dividend yield on DHS was 3.88%.
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