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2 Dividend ETFs For Passive Income Seekers

By Tezcan Gecgil/Investing.com ETFsMay 31, 2021 04:49AM ET
www.investing.com/analysis/2-dividend-etfs-for-passive-income-seekers-200583302
2 Dividend ETFs For Passive Income Seekers
By Tezcan Gecgil/Investing.com   |  May 31, 2021 04:49AM ET
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In low interest rate environments dividends are important for many long-term investors. Buying dividend stocks and reinvesting them to buy more shares is likely to result in considerable growth in savings. Individuals nearing retirement tend to favor stocks with reliable dividends in their portfolios.

Established blue-chip businesses usually pay out a significant percentage of their earnings as dividends. Such companies tend to have large moats and are resilient in economic downturns.

Investors regard them as defensive names. Thus, Wall Street typically reacts positively to corporate announcements of dividend increases by such dividend payers, which are usually some of the most recognized names in corporate America.

We previously discussed exchange-traded funds (ETFs) with juicy dividend yields (for example, here, here, and here). Today’s article extends the discussion and introduces two additional funds that could be appropriate for those who want to include ETFs with stable and respectable dividends.

1. iShares Core High Dividend ETF

  • Current Price: $98.10
  • 52-Week Range: $76.23 - $100.48
  • Dividend Yield: 3.60%
  • Expense Ratio: 0.08% per year

The iShares Core High Dividend ETF (NYSE:HDV) provides exposure to high dividend-paying US equities. Since its inception in March 2021, assets under management have grown to $7.05 billion.

HDV Weekly
HDV Weekly

HDV which has 75 holdings, tracks the returns of the Morningstar Dividend Yield Focus Index. In terms of sectors, energy has the highest weighting with 17.98%. Next in line are health care (16.15%) and consumer staples (15.01%).

The top ten names make up around 55% of the fund. In other words, the ETF is top-heavy. Among the leading names are Exxon Mobil (NYSE:XOM), JPMorgan Chase (NYSE:JPM), Johnson & Johnson (NYSE:JNJ), Verizon Communications (NYSE:VZ) and Chevron (NYSE:CVX).

Since the start of the year, the fund is up close to 12% and hit an all-time-high (ATH) in early May. HDV’s current P/E and P/B ratios stand at 23.44 and 3.28, respectively.

Those readers who are looking to invest in high-yield equities should keep the fund on their radar screen. We like many of the names, which have not necessarily participated in some of the speculative rallies of the past year. A potential decline toward $95 or even below would improve the margin of safety of the fund.

2. Invesco S&P 500 High Dividend Low Volatility ETF

  • Current Price: $45.09
  • 52-Week Range: $31.56 - $46.49
  • Dividend Yield: 4.19%
  • Expense Ratio: 0.30%

The Invesco S&P 500® High Dividend Low Volatility ETF (NYSE:SPHD) invests in S&P 500 businesses with low volatility that also offer high dividend yields. Lower volatility would ideally mean less downside in the case of broader market declines. However, we should note that in the early weeks of the pandemic in 2020, SPHD was also quite volatile.

SPHD Weekly
SPHD Weekly

SPHD, which tracks the S&P 500 Low Volatility High Dividend Index, has 52 holdings. The fund started trading in October 2012, and net assets stand at $3.14 billion. Utilities currently have the highest weighting (17.92%), followed by consumer staples (15.40%) and information technology, IT, (12.74%).

The top ten names comprise close to 30% of the fund, which is rebalanced semi-annually, in January and July. No stock currently has a weighting of over 3.75%.

Document storage and record management service Iron Mountain (NYSE:IRM), telecommunications carrier Lumen Technologies (NYSE:LUMN), Exxon Mobil, energy infrastructure group Kinder Morgan (NYSE:KMI) and Altria Group (NYSE:MO), one of the largest producers of cigarettes and related products, are among the leading names in the roster.

Year-to-date, SPHD has returned almost 20% and saw a record high on May 10. Given how far the fund has appreciated in recent months, short-term profit-taking could be on the cards. Potential investors would find better value around $42 or below. We like the sectoral diversification as well as the fact that the fund is not top heavy.

2 Dividend ETFs For Passive Income Seekers
 

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2 Dividend ETFs For Passive Income Seekers

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Comments (8)
Gülgün Önoğlu
Gülgün Önoğlu Jul 12, 2021 8:14AM ET
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Hi Tezcan, can you review Nasdaq and tell us some potential ETFs in Nasdaq for the second term of the year?
Ogundijo isaac
Ogundijo isaac May 31, 2021 11:13PM ET
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not clear
Kendall Fleming
Kendall Fleming May 31, 2021 11:13PM ET
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What's not clear?
Kendall Fleming
Kendall Fleming May 31, 2021 11:13PM ET
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What's is it that you find unclear?
elliot trach
elliot trach May 31, 2021 10:58PM ET
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Most brokerages require $2,000 to open an account. I don't know that need a bank acct. It would just be usual to have. Don't know if accept cash. Robinhood, etc I don't know about. If you haven't got amount of money, should not be in stock market---should be saving. Stock market easily goes down 10-20%. Can go down 50% in a crash
Ann Eye Amhere
Ann Eye Amhere May 31, 2021 1:52PM ET
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How? I'd be glad for further assistance in the future.
Roy Maga
Roy Maga May 31, 2021 1:52PM ET
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Hi Ann what do you need assistance with?
Abdusali Sawadi
Abdusali Sawadi May 31, 2021 1:12PM ET
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teach me how to market this is my first time
JEMSHID MOHAMED
JEMSHID MOHAMED May 31, 2021 1:12PM ET
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I don't know anything about marketing
Ty Rafael
Ty Rafael May 31, 2021 1:12PM ET
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I think he was trying to ask, how to invest in the stock market.
Abdus Samee Fakhi
Abdus Samee Fakhi May 31, 2021 1:12PM ET
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download investing .com n learm they will give u webnar classes also ask them whatever
Mc Regino
Mc Regino May 31, 2021 1:03PM ET
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but I don't have bank account
Aakas Shahi
Aakas Shahi May 31, 2021 1:03PM ET
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DIKSHANK PATIL
DIKSHANK PATIL May 31, 2021 1:03PM ET
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you can use your parents acc
Roy Maga
Roy Maga May 31, 2021 1:03PM ET
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You must have a bank account to invest
Mc Regino
Mc Regino May 31, 2021 1:02PM ET
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how to invest
Roy Maga
Roy Maga May 31, 2021 1:02PM ET
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Open and account with one of the brokers, Link a bank account to fun it and buy stocks:)
Kenneth Dobrowolski
Kenneth Dobrowolski May 31, 2021 6:03AM ET
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I would definitely start to park some of my capital in these high yielding ETF’s.
 
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