With the unpredictable nature of the stock market in 2021, many investors are turning to dividend ETFs as a reliable source of income. These exchange-traded funds offer a diversified portfolio of high-yielding dividend-paying stocks, making them an attractive option for those looking to generate passive income. In this article, we will explore the top dividend ETFs to watch in 2021 for US stock trading, providing detailed information on each fund and its performance.
1. Vanguard Dividend Appreciation ETF (VIG)
The Vanguard Dividend Appreciation ETF (VIG) is one of the most popular dividend ETFs on the market. This fund tracks the performance of the NASDAQ US Dividend Achievers Select Index, which consists of companies with a history of increasing their dividends over time. With a low expense ratio of 0.06% and a current yield of around 1.6%, VIG is a solid option for investors seeking stable and consistent dividend income.
2. iShares Select Dividend ETF (DVY)
The iShares Select Dividend ETF (DVY) is another top-performing dividend ETF that focuses on high-yielding stocks. This fund tracks the performance of the Dow Jones US Select Dividend Index, which includes companies with a history of strong dividend growth. With an expense ratio of 0.39% and a current yield of around 3.5%, DVY offers investors a solid return on their investment.
3. SPDR S&P Dividend ETF (SDY)
The SPDR S&P Dividend ETF (SDY) is a dividend ETF that tracks the performance of the S&P High Yield Dividend Aristocrats Index. This index includes companies that have consistently increased their dividends for at least 20 consecutive years. With an expense ratio of 0.35% and a current yield of around 2.2%, SDY is a strong option for investors seeking stable dividend income from established companies.
4. Schwab US Dividend Equity ETF (SCHD)
The Schwab US Dividend Equity ETF (SCHD) is a dividend ETF that tracks the performance of the Dow Jones US Dividend 100 Index. This index includes companies that have a history of consistent and reliable dividend payments. With an expense ratio of 0.06% and a current yield of around 2.8%, SCHD is a solid option for investors seeking a mix of high-yielding and growth-oriented dividend stocks.
5. iShares Core High Dividend ETF (HDV)
The iShares Core High Dividend ETF (HDV) is a dividend ETF that focuses on high-yielding stocks with strong growth potential. This fund tracks the Morningstar Dividend Yield Focus Index, which includes companies with a history of strong dividend growth and solid financial performance. With an expense ratio of 0.08% and a current yield of around 3.8%, HDV is a top choice for investors seeking both income and growth from their dividend investments.
6. WisdomTree US Quality Dividend Growth ETF (DGRW)
The WisdomTree US Quality Dividend Growth ETF (DGRW) is a dividend ETF that focuses on companies with a history of strong dividend growth and solid financial performance. This fund tracks the performance of the WisdomTree US Quality Dividend Growth Index, which includes companies that exhibit quality characteristics such as high return on equity and low debt levels. With an expense ratio of 0.28% and a current yield of around 2.1%, DGRW is a top choice for investors seeking high-quality dividend income.
7. ProShares S&P 500 Dividend Aristocrats ETF (NOBL)
The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) is a dividend ETF that tracks the performance of the S&P 500 Dividend Aristocrats Index. This index includes companies that have consistently increased their dividends for at least 25 consecutive years. With an expense ratio of 0.35% and a current yield of around 2.5%, NOBL is a solid option for investors seeking stable dividend income from blue-chip companies.
8. First Trust Morningstar Dividend Leaders Index Fund (FDL)
The First Trust Morningstar Dividend Leaders Index Fund (FDL) is a dividend ETF that tracks the performance of the Morningstar Dividend Leaders Index. This index includes companies that have a history of strong dividend growth and solid financial performance. With an expense ratio of 0.45% and a current yield of around 3.2%, FDL is a top choice for investors seeking high-quality dividend income from established companies.
9. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
The Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) is a dividend ETF that focuses on high-yielding stocks with low volatility. This fund tracks the performance of the S&P 500 Low Volatility High Dividend Index, which includes companies that have a history of strong dividend growth and low price volatility. With an expense ratio of 0.30% and a current yield of around 4.5%, SPHD is a solid option for investors seeking stable dividend income with reduced risk.
10. Invesco Dividend Achievers ETF (PFM)
The Invesco Dividend Achievers ETF (PFM) is a dividend ETF that tracks the performance of the NASDAQ US Broad Dividend Achievers Index. This index includes companies that have a history of consistent and reliable dividend payments. With an expense ratio of 0.54% and a current yield of around 2.7%, PFM is a strong option for investors seeking a diversified portfolio of high-yielding dividend stocks.
FAQs:
1. Are dividend ETFs a good investment for income?
Dividend ETFs can be a good investment for income, as they provide investors with a diversified portfolio of high-yielding dividend-paying stocks. However, it is important to do thorough research and due diligence before investing in any particular fund to ensure it aligns with your investment goals and risk tolerance.
2. How are dividend ETFs taxed?
Dividend ETFs are taxed as qualified dividends, which are subject to a lower tax rate than ordinary income. Investors who hold dividend ETFs in a taxable account may be required to pay taxes on any dividends received, but may also benefit from tax advantages such as the qualified dividend tax rate.
3. What is the difference between dividend yield and dividend growth?
Dividend yield is a measure of the annual dividend income a stock or ETF pays relative to its price, expressed as a percentage. Dividend growth, on the other hand, is a measure of how much a company has increased its dividend payments over time. Investors may consider both dividend yield and dividend growth when evaluating dividend ETFs for investment.
4. Are dividend ETFs less volatile than growth ETFs?
Dividend ETFs may be less volatile than growth ETFs, as they tend to focus on established companies with stable earnings and dividend payments. Investors seeking income and stability in their portfolio may prefer dividend ETFs over growth ETFs, which may be more susceptible to market fluctuations.
5. How can investors decide which dividend ETF is right for them?
Investors can decide which dividend ETF is right for them by considering factors such as investment goals, risk tolerance, and time horizon. It is important to research the holdings, performance, and expense ratio of each fund, as well as consult with a financial advisor if needed, to determine the best dividend ETF for your individual investment strategy.
Conclusion:
In conclusion, dividend ETFs can be a valuable addition to any investor’s portfolio, offering a reliable source of income and potential for growth. The top dividend ETFs to watch in 2021 for US stock trading include Vanguard Dividend Appreciation ETF (VIG), iShares Select Dividend ETF (DVY), SPDR S&P Dividend ETF (SDY), Schwab US Dividend Equity ETF (SCHD), and iShares Core High Dividend ETF (HDV), among others. By carefully researching and selecting the right dividend ETFs for your investment goals, you can build a diversified portfolio that generates passive income and helps you achieve long-term financial success in the stock market.