![]() SPDR® S&P Dividend ETF charges 0.35% fee and pays a 2.6% dividend yield. Nevertheless, SDY is one of the few dividend growth ETFs that provides exposure to REITs. Therefore, SPDR® S&P Dividend ETF has minimal exposure to technology stocks. Many tech companies do not meet the strict requirements of paying dividends in the past 20 years. The highest yielding firms are then weighted by dividend yield. SDY uses dividend sustainability screens and only holds companies that have increased dividends for the past 20 years. SPDR® S&P Dividend ETF, SDY, tracks a yield-weighted index of dividend-paying companies from the S&P 1500 Composite Index. Due to its methodology, VYM tends to hold a large basket of large-cap value stocks. The remaining stocks are weighted by market capitalization. ![]() Only the stocks in the top half are selected. The ETF selects its holdings by ranking companies by their forecast dividends over the next 12 months. Vanguard High Dividend Yield ETF charges 0.06% fee and currently pays a 3.2% dividend yield. VYM ETF offers a low-cost, diversified, conservative exposure to high dividend yield large-cap stocks. The underlying index excludes real estate investment trusts (REITs). The index selects high-dividend-paying US companies and weights them by market cap. Vanguard High Dividend Yield ETF, VYM, tracks the FTSE High Dividend Yield Index. Source: Vanguard High Dividend Yield ETF – VYM Dividend Growth ETF Performance 2010-2019 Ticker Depending on your goals, each ETFs will give you a different exposure and dividend payout. Besides their shared focus, these dividend ETFs have a different approach in constructing their underlying portfolio. I have prepared a list of my favorite five dividend growth ETFs. Retirement Calculator Our top Dividend Growth ETF picks Furthermore, compared to mutual funds, exchange-traded funds offer an inexpensive and tax-efficient way to invest without worrying about annual capital gains distributions. With a 10-year US treasury paying below 1%, income investors will need to look elsewhere for income. In the current low-interest environment, dividend growth ETFs are a compelling low-cost option for investors looking for extra yield. ![]() Many retirees use dividends to supplement their income during retirement. Above all, the extra cash from dividends provides a buffer from market volatility. Investors often view high dividend blue-chip companies as financially stable and less volatile than growth companies. Companies that steadily grow their dividends year over year are known as dividend aristocrats. Certainly, dividend-paying stocks provide a predictable stream of cash flows to investors looking for extra income. Dividend growth ETFs offer a convenient and diversified way to invest in companies that consistently grow their dividends.
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