Introduction
In this article, we will review five of the best dividend index funds in the United States, which can be useful in retirement.
SDY: SPDR S&P Dividend ETF
The SPDR S&P Dividend ETF is one of the best dividend index funds. It includes stocks in 112 companies known as “dividend aristocrats,” which are the stocks with the highest dividend yields listed in the S&P Composite 1500 Index. These companies have increased their dividends for at least 20 consecutive years, providing a steady income for retirees.
VIG: Vanguard Dividend Appreciation ETF
The Vanguard Dividend Appreciation ETF holds shares in 182 companies that have increased their dividends over the past ten years. The fund tracks the NASDAQ US Dividend Achievers Select Index (formerly known as the Dividend Achievers Select Index). The yield was 1.61% in April 2021. This fund is passively managed, offering a low expense ratio of 0.06%, allowing you to keep more of your earnings.
DVY: iShares Select Dividend ETF
The iShares Select Dividend ETF owns 100 stocks that have paid dividends for the past five years. The stocks are sorted by dividend yield, earnings per share growth rate, and dividend payout ratio. This fund tracks the Dow Jones U.S. Select Dividend Index. The yield was 3.32% and the expense ratio was 0.39% in April 2021. An average of 675.55 million shares of the fund were traded across all U.S. exchanges over the 30 days.
PFF: iShares S&P Preferred and Income Securities ETF
The iShares Preferred and Income Securities ETF is a high-yield dividend index fund made up of preferred stocks. Most of the preferred stocks in this fund come from financial institutions such as banks and insurance companies. The fund tracks the ICE Exchange-Listed Preferred and Hybrid Securities Index. The fund boasts a yield of about 4.7% and an expense ratio of 0.46%.
DTD: WisdomTree U.S. Total Dividend Fund
The WisdomTree U.S. Total Dividend Fund holds 667 shares in U.S. companies, weighted by the expected dividend yield rather than the traditional approach of weighting stocks by market capitalization. This approach allows you to own more shares in companies that pay higher dividends. The fund tends to give the largest weight to the information technology and financial sectors. This fund tracks the WisdomTree U.S. Dividend Index. The yield over the past 12 months was 2.68% and the expense ratio was 0.28% in April 2021.
The Role of Dividend Index Funds in Your Retirement Portfolio
Investing in these funds exposes you to dividend-paying stocks that can be a source of income during retirement. They can act as a hedge against inflation, but dividends are not guaranteed.
Source: https://www.thebalancemoney.com/us-dividend-income-index-funds-for-retirement-income-2388686
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