Although several persons invest in ETFs, only a few invest in Exchange-Traded Funds (ETFs) with high dividends. Why?
It all comes down to the quality of information they have access to!
To win in the world of investment, especially in ETFs, you need quality information. It is the quality of information you have that determines how much you make.
This article will be discussing the ETFs with the highest dividends.
Are you ready?
What is an Exchange Traded Fund (ETF)?
According to Investopedia, an Exchange Traded Fund is a type of security that tracks an underlying asset and can be traded on a stock market, just like other securities.
ETFs can be structured to track just about any asset class. They can be structured to track stocks, cryptocurrencies, bonds, commodities, or a group of securities.
They can also be designed to track an investment strategy. The SPDR S&P 500 ETF which tracks the S&P 500 index, is a good example.
ETF shares are sold on the stock exchange, just like any other stock, and their share prices are subject to fluctuations that usually occur as shares are bought and sold in the stock market.
How does an ETF Work?
So, how does an ETF work?
The Exchange Traded Fund provider designs a fund to track the performance of an underlying asset (such as stocks) or index and then sells the shares of this fund on the stock exchange.
Investors who buy these shares do not own the underlying assets this fund tracks. They only own the volume of shares they paid for in the fund.
Although ETFs track the value of an underlying asset or index, they trade at a price different from the price of their underlying asset.
The price at which an ETF share sells on the stock exchange is determined by the market forces of demand and supply.
A smart way to invest in ETFs is to invest in those that pay high dividends.
ETFs that pay high dividends to ensure that apart from the possibility of your ETF shares increasing in value, you will be entitled to periodic dividend payments.
We will be discussing some of the ETFs with the highest dividends, in this section.
As the name suggests, this is one of those ETFs that investors can count on to receive high dividends.
Launched on the 6th of August 2011, the Global X Super Dividend ETF has continued to help investors meet their investment goals.
This fund invests in 100 of the highest dividends yielding securities around the world. It seeks investments outcomes that correspond to the price and yield performance before fees and expenses, of the Solactive Global Super Dividend Index.
It trades under the ticker symbol SDIV.
What do investors stand to gain?
One advantage that comes with investing in this ETF is its high-income potential. It invests in 100 of the highest dividend-paying securities, so investors can be sure to receive good dividends periodically.
Investors in this fund can expect to receive monthly dividends. In fact, Global X Super Dividend ETF has paid monthly dividends consistently for the past 9 years.
What’s more, the investments in this fund are from around the world. Thus, it protects investors’ funds from geographic and interest rate exposure.
iShares Emerging Markets Dividend ETF
Launched on 23 February 2021, this fund was designed to track the investment results of the Dow Jones Emerging Markets Select Index, which comprises high dividend-paying equities in emerging markets.
This fund invests about 80% of its assets in the component securities of the index and other similar investments.
The fund tracks the performance of the top 100 dividend-paying companies in emerging markets. These companies are selected based on the dividend paid to investors and other criteria.
This fund trades under the ticker symbol DVYE, on the New York Stock Exchange Arca.
What do you stand to gain as an investor?
Firstly, you will enjoy the benefits that come with exposure to a wide range of established companies in emerging economies.
In addition, you could use this fund to extend your investment strategy to include the economies of emerging markets. Thereby shielding your investments from unforeseen challenges that may arise in your local economy.
Global X MSCI Super Dividend Emerging Markets ETF
This fund is managed by MSCI, an American finance company. It invests in 50 of the highest dividends-producing securities in emerging markets.
It seeks to produce investment outcomes that correspond with the price and performance of the MSCI Emerging Markets Top 50 Dividend Index.
This index tracks the performance of 50 evenly weighted companies that rank among the highest dividend-paying equity in emerging markets.
This fund trades with this ticker symbol – SDEM, in the New York Stock Exchange.
What do you stand to gain by investing in this fund?
This fund invests in 50 of the highest dividends yielding securities, so investors can be sure of receiving good dividend payments at stipulated times.
In addition, STEM pays investor dividends monthly. Investors do not have to wait till the end of the year to receive their dividends.
Finally, emerging markets often have a higher growth potential than established or developed markets. Investing in this fund increases your chances of seeing remarkable increases in the value of your portfolio.
Global X Super Dividend U.S. ETF
This high dividend ETF is managed by Global X Management, a New York-based provider of exchange-traded funds.
This fund invests at least 80% of its total assets in the securities of its underlying index.
This underlying index tracks the performance of 50 even weighted common stocks, including Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) that rank among the highest dividend-producing equity in the US.
This fund trades under the ticker symbol – DIV, on the New York Stock Exchange Arca.
Why should you consider investing in this high dividend ETF?
If you are looking to improve your portfolio’s yield, investing in DIV will be a smart move for you. This is because it tracks the performance of 50 of the highest dividend-paying equities in the US.
What’s more, this fund has made dividend distributions consistently for the last eight years. Their track record suggests that investors can trust them with their money.
Finally, this high dividend ETF has a method of investment that prioritizes investment in securities with low risk, to ensure the safety of investor capital.
Global X MSCI Super Dividend EAFE ETF
This high dividend ETF invests in 50 of the highest dividends yielding equity from the MSCI EAFE Index.
This index includes securities from developed economies outside the USA, such as Australia, and other developed economies in the far east and Europe.
This fund tracks the performance of the MSCI EAFE top 50 dividend index
This fund is provided by MSCI, and it trades under the ticker symbol EFAS.
Why invest in EFAS?
EFAS accesses 50 of the highest dividend-paying equities available in the MSCI EAFE index. So, investors can be sure to enjoy a high dividend from this fund.
This fund makes monthly dividend distributions to the account of investors. Investors who enjoy such arrangements can take advantage of this fund.
The investor’s portfolio enjoys the benefits of exposure to foreign markets, as this fund invests in equities in developed economies in Europe, Australia, etc.
WisdomTree Emerging Markets High Dividend Fund
The fund is offered by Wisdom Tree Investments Inc., a New York-based exchange-traded fund and asset manager.
This high dividend ETF seeks to track the investment results of high dividend-yielding companies in emerging markets.
It trades with the ticker symbol DEM, in the New York Stock Exchange Arca.
Why invest in DEM?
If you are looking to gain exposure to targeted markets with high dividend-yielding companies, DEM will be a great investment for you, as it does that.
In addition, you can use this high dividend ETF to diversify your income strategy.
What’s more, you can also use this fund as a growth and income-focused investment.
iShares International Select Dividend ETF
Founded in 2007, this high dividend ETF seeks to track the investment outcomes of the Dow Jones EPAC Select Dividend Index.
This dividend is composed of 100 high dividend-paying equities in the Dow Jones World Developed-Ex US Index.
This index is designed to track 95% of the market capitalization of stocks traded in developed markets outside the United States.
The fund invests at least 80% of its assets in the securities of its underlying index and other securities that have similar characteristics to the securities in its underlying index
This underlying index measures the performance of high dividend-paying companies in developed markets such as available in Canada, Europe, and some countries in Asia.
The iShares International Select Dividend ETF trades with the ticker symbol IDV.
Why should you invest in the IDV?
It guarantees you exposure to developed and high-quality international companies, that have consistently paid high dividends to their investors.
Finally, it gives you access to developed markets around the world, and options to expand your income strategy.
Founded in May 2013, this high dividend ETF seeks to track the performance of the S&P Global Dividend Aristocrats Index. The fund invests at least 80% of its total assets in this index.
The index is designed to measure the performance of high dividend-paying companies listed in the S&P Global BMI.
It selects the top 100 stocks with the highest dividend yield across several countries, picking not more than 20 stocks from a single country.
The securities selected are measured based on their dividend yield and then rebalanced annually, so that no individual security has a weight higher than 3% of others, and no single industry weighs more than 25% of the entire portfolio.
This ETF trades with the ticker symbol WDIV, on the New York Stock Exchange Arca.
iShares Asia/Pacific Dividend ETF
This high dividend ETF was launched in February 2012, with the ticker symbol DVYA, on the New York Stock Exchange Arca.
This fund seeks to track the performance of its underlying index, which comprises dividend-paying securities across the developed markets in the Asia/Pacific region.
This index is known as the Dow Jones Asia/Pacific Select Dividend 50 Index.
The index measures the performance of high dividend-paying organizations operating in Australia, Japan, Hong Kong, Singapore, and New Zealand area.
The DVYA invests at least 80% of its assets in securities of its underlying index and other securities that share similar economic characteristics with its underlying index.
So why should you invest in DVYA?
You will enjoy the benefits that come from exposure to established companies in Asia/Pacific.
You will also have access to consistently high dividend-paying stocks in developed economies like Australia, Singapore, Japan, etc.
Finally, it is a viable option that you could explore to expand your investment strategies beyond your current location, as it gives you access to developed international markets.
This is by no means an exhaustive list of high dividend ETFs.
These, however, are about the highest dividend-yielding ETFs you will find on the Stock exchange (as at the time of this writing).
As you consider these investment opportunities, ensure to discuss with a trusted broker to guide you on how to take advantage of them.
This is because investing in ETFs is more complex than it appears. Discussing with a broker will help you come up with a good ETF investment strategy that will help you get better results.
To your success, as you proceed to improve your financial future.