The financial market is full of opportunities for anyone who is looking to maximize their gains. A choice that is becoming increasingly popular is the best dividend ETFs to buy in the investment industry.
ETF stands for Exchange Traded Funds. They are well known in the financial sectors for being less risky, have a lower expense ratio, and usually have a lower commission.
An ETF is a basket of such securities as stocks, bonds, or commodities. This basket is formed by specific industry, company, or region, and the bottom line is that it tracks an underlying index. Another interesting thing about ETFs is that they are exchanged like stocks during market hours.
For this page, we have prepared a list that goes over the best dividend ETFs to buy on the market this 2021. We invite you to continue reading and find the best option for you.
What is a dividend ETF?
A dividend ETF is an Exchange Traded Fund formed by a dividend-paying financial group of companies, regions, or sectors with more predictable profit, more substantial history, and less risk. For example, oil, basic materials, healthcare, pharmaceutical, bank, financial, and more.
A dividend is an economic return which the company pays you in cash or extra stock. Dividend ETFs will pay their shareholders quarterly (every three months) or even monthly. It is usually previously determined by the board of directors.
According to Investopedia, "the dividend ETF universe consists of about 96 funds, excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM)."
Invest in dividend ETFs in 3 steps
Open a trading account
A trading account is easy to open. Simply enter the required information such as name, phone number, email, and password. You will receive a verification code to your inbox or your spam folder. Once you click on it, your account will be activated.
Choose dividend ETFs
It is time to make your first deposit to choose your dividend ETF. Be aware that your broker might require a minimum deposit. Select your initial amount and credit it into your account using one of the methods provided. It can be a credit or debit card, bank wire transfer, or epayments.
Place your trade
Once your deposit amount and method are confirmed, they should appear on your account balance. Look for the available dividend ETFs. The broker might offer you ideas on what you can buy with your account funds, or you can place your own trade and buy one or several shares.
Where can I trade dividend ETFs?
Now that you like the idea of trading dividend ETFs, how and where to start? Brokers are the intermediary between you and the financial exchange and will offer you services to access the best dividend ETFs to trade. We have shortlisted the top three brokers.
It is essential to get as much information as possible about the broker to make sure they fit your needs. Where are they regulated, are residents of your country eligible? If you need good educational material, webinars, and seminars check if they provide them.
Take a look at their trading platforms to see which one suits you. The allowed trading techniques, risk management, and features should also be part of your pros and cons list before you begin trading the best dividend ETFs.
Best dividend ETFs to buy now
It is time to introduce you to the best ETFs to trade. We have made a list and specified the reasons why we included each of them. They earned their place in the list by having a reliable team behind them and excellent historical performance, among other factors.
- SDEM - Global X MSCI SuperDividend Emerging Markets ETF
- VYM - Vanguard High Dividend Yield
- DIV - Global X SuperDividend U.S. ETF
- SDIV - Global X SuperDividend ETF
- DVYE - iShares Emerging Markets Dividend ETF
- SPHQ - Invesco S&P 500 Quality ETF
- VIG - Vanguard Dividend Appreciation ETF
- HDV - iShares Core High Dividend
- SDY - SPDR S&P Dividend
- SCHD - Schwab U.S. Dividend Equity ETF
SDEM - Global X MSCI SuperDividend Emerging Markets ETF
SDEM has been around since March 2015 with $24.48 million worth of managed assets. Some of the emerging markets in this ETF are Hong Kong, South Africa, Brazil, India, and others. They have a total of 50 holdings where some of the sectors include financials, energy, and utilities.
VYM - Vanguard High Dividend Yield
With a yearly daily return of about 1.83%, VYM comprises only US companies that are high dividend-paying. This ETF was created in 2006 and now has an average weighted market cap of $140.60 billion. It’s top three sectors are financials, consumer non-cyclical, and healthcare.
DIV - Global X SuperDividend U.S. ETF
DIV tracks 50 US high dividend securities. Its top holdings include B&G Foods Inc., Kraft Heinz, General Mills, and others with low volatility. Since its creation in 2013, it now has 42 holdings and an average market cap of $32.69 billion.
SDIV - Global X SuperDividend ETF
This dividend ETF has a total of 102 holdings where the top three sectors are financials, basic material, and energy. SDIV was born in 2011 and, according to etf.com, "tracks an equal rated weighted index of 100 global securities with high yields."
DVYE - iShares Emerging Markets Dividend ETF
Another emerging markets dividend ETF is DVYE. This open-ended fund has been around since 2012 and offers an average spread of 0.12%. With 95 holdings, its average market cap is $14.12 billion. Its top 10 countries include Hong Kong, the Russian Federation, Brazil, South Africa, Thailand, and others.
SPHQ - Invesco S&P 500 Quality ETF
Initiated in 2006, SPHQ has a total of $230.1 million worth of assets under management. It has a one-year trailing total return of 9.4% and an average daily volume of $13.52 million. Its top three sectors are technology, healthcare, and industrials.
VIG - Vanguard Dividend Appreciation ETF
VIG offers its clients a one-year daily return of about 10.01%. It is dedicated to the market cap-weighted index of US companies with a total of 215 holdings. It includes such companies as Microsoft Corporation, Walmart Inc., and others. Its average daily volume is $198.70 million, with a market cap of $227.75 billion.
HDV - iShares Core High Dividend
Founded in 2011, HDV has 77 holdings that include only US companies. Its most important sectors are healthcare, energy, and telecommunications are their most important sectors. It has a total of $5.83 billion worth of assets under management and a market cap of $153.89 billion.
SDY - SPDR S&P Dividend
This dividend ETF has a one year daily total return of 2.85%. It only holds firms that have had rising dividends for at least 20 consecutive years. For now, it has 118 US holdings like Exxon Mobil Corporation, Chevron Corporation, and People's United Financial Inc. SYD has an average daily volume of $69.21 million, and it offers spreads of approximately $0.03.
SCHD - Schwab U.S. Dividend Equity ETF
Made up of important US dividend-paying companies, some of the dominant sectors of this ETF are financials, industrials, and consumer non-cyclical. While its average daily volume lies at $109.72 million, its one year daily total return is 14.08%. It has a total of 102 holdings and $17.17 billion worth of assets under management.
Expert tip on investing in dividend ETFs
A recurring topic in the trading industry is the ability to handle your emotions when trading. Since you can trade ETFs like stocks during market hours, breaking news may change the direction of the price. It could or could not affect your dividend ETF, but the idea is to be calm and use your knowledge to maximize your profit.
Why trade ETFs?
ETFs are getting more popular in finance because they can be bought or sold during business hours but imply a lower risk. Also, they follow indices and try to keep commissions low. By trading dividend ETFs, you will even get a share of the company earnings. Dividend ETFs could be a good trading idea because the companies associated with this basket of securities have a proven track record, good dividends, and operate within sectors with lower risk.
Frequently Asked Questions
The number one dividend ETF will depend on what sector or region you would like to invest in. It is also always a good idea to look at its performance.
They are getting more popular because of their returns and lower risk.
Traders can invest in dividend ETFs if they like how this financial asset works.
ETFs are baskets of securities that can sell stocks, commodities, or bonds. A share is a unit of stock.
If you are a beginner, but you have studied enough to enter the market or you have a mentor, it could be the right investment for you.
There are around 96 funds compromised in the dividend ETF universe.