These 3 Passive-Income ETFs Are a Retiree’s Best Friend
Most people don’t want to spend much time managing their retirement portfolio once they’ve stopped working. After all, you’ve made it! This is the period in your life when it’s time to relax. It is essential to know the tools available to help you build a diversified nest egg that will meet your needs without having to watch it 24/7.
That’s where exchange-traded funds (ETFs) can help. These are buckets of stocks that trade under one ticker symbol. An ETF might follow an index or a particular investment strategy. The great thing is that a small handful of ETFs can create a well-diversified portfolio that will help protect you from risk.
Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »
Here are three ETFs that could be a retiree’s best friend. They are different from one another, but all three offer retirees the passive income they need.
America is home to many of the world’s most prominent companies, which is why the U.S. stock market is more valuable than any other countries’ by a wide margin. However, there are still remarkable companies outside the United States that can help your portfolio.
The Vanguard International High Dividend Yield ETF (NASDAQ: VYMI) is a great way to add that international investment exposure without having to wade through data that could be in different currencies or languages. It’s the perfect situation for an ETF. It carries a 0.22% expense ratio, which Vanguard claims is far lower than comparable funds.
VYMI Dividend Yield data by YCharts
The ETF holds nearly 1,500 stocks, primarily companies based in North America, Europe, the Pacific region, and emerging markets. Its holdings span virtually all industries and includes top holdings like Nestle, Novartis, Roche, and Shell.
The ETF’s current yield is approximately 4.6%. Since its inception in 2016, the ETF has generated annualized total returns averaging 8.3%. Consider the Vanguard International High Dividend Yield ETF a great ETF for investing in fantastic companies that probably wouldn’t be on your radar otherwise.
The passive income doesn’t stop there. The Invesco High Yield Equity Dividend Achievers ETF (NASDAQ: PEY) tracks an index of 51 stocks on the Nasdaq stock exchange with high yields and a history of dividend growth. Financial and utility stocks comprise roughly half the ETF, which lists Walgreens Boots Alliance, Altria, Franklin Resources, Verizon Communications, and UGI among its largest holdings. No stock represents more than 4% of the ETF, so it’s well-diversified despite holding just 51 stocks.
Story Continues
PEY Dividend Yield data by YCharts
This ETF’s expense ratio is 0.53%, a little higher than I generally like. However, it has averaged a 9.5% annualized return (pre-tax) over the past decade, giving investors solid total returns while meeting their passive income needs.
Invesco High Yield Equity Dividend Achievers ETF currently yields 4.6%. The fund’s market price has climbed amid the Federal Reserve’s interest rate cuts, which underlines how attractive these reliable high-yield ETFs can be to investors in a lower-rate investing climate.
Peace of mind is increasingly important as you age, which attracted me to the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEMKT: SPHD). This ETF holds 52 companies listed on the S&P 500 index with high dividend yields and low betas.
Stocks with high dividend yields can be more volatile because high yields can signal underlying trouble in a company. However, these low-beta stocks are the exception to this common wisdom. They generally stay more grounded and don’t go up or down as sharply as the broader market.
SPHD Dividend Yield data by YCharts
Its top holdings include Bristol Myers Squibb, Altria, Kinder Morgan, AT&T, and Dominion Energy. Once again, the ETF holds a modest number of stocks (52), but the largest weighting is just over 3%. It’s all spread pretty evenly, which means the ETF is well-diversified.
The fund’s yield is just 3.4%, following strong performance over the past 12 months. The ETF’s annualized total returns have averaged 10% for the past decade, a pretty good deal considering the expense ratio is just 0.30%. Those looking for an ETF of mature blue chip dividend stocks should take a good look here.
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $23,818!*
Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,221!*
Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $451,527!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of November 11, 2024
Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Kinder Morgan. The Motley Fool recommends Dominion Energy, Nestlé, Roche Holding AG, and Verizon Communications. The Motley Fool has a disclosure policy.
These 3 Passive-Income ETFs Are a Retiree’s Best Friend was originally published by The Motley Fool
#PassiveIncome #ETFs #Retirees #Friend