An exchange-traded fund also known as ETF is one of the best ways to begin investing. ETF allows an investor to purchase many bonds and stocks at once without much expense or effort. A high dividend ETF is what allows an investor the opportunity to make regular money without going through the stress of hand-picking individual dividend stocks.
In the course of this article, we will be reviewing the best ETFs with high dividends and show you a practical guide on how to invest in them.
What Is ETF?
ETF (Exchange Traded Fund) is a fund that trades on exchanges that are tracking a particular index. It can be seen as a basket of securities that can be used by investors to track a sector commodity, an asset, or an index.
As a practical example, when you buy an S&P 500 ETF, your money will be invested into the 500 companies that are contained in that index. Shares of ETFs can be purchased by an investor whenever the stock market is open.
What Is ETF Dividend?
ETF Dividend can be defined as an exchange-traded fund that is used to invest in a basket of dividend-paying stocks. In the case of an ETF dividend, the fund manager will choose a portfolio of stocks based on a dividend index, that pays dividends to investors. This is a tangible income investing strategy for investors that purchase the ETF.
It is important to note that Dividend ETFs are passively managed by the fund manager who follows an index and does not make trading decisions often. If you are the type of investor that is risk-averse and income-seeking, then a Dividend ETF is a good investment choice.
4 Best Dividend ETFs
If you are an investor, the following are 4 high dividend ETFs that you can use to build your wealth on the market:
1. Global X MLP ETF
The Global X MLP ETF is an Exchange-traded fund that can be used to track Master Limited Partnerships also known as MLPs. This ETF can be used to invest in partnerships and companies in the energy sector.
It has three largest holdings, namely; Energy Transfer LP, Enterprise Products Partners LP, and Magellan Midstream Partners LP. It is the go-to Dividend ETF if you want to keep costs from eating into profits. The current yield of the ETF is 8.8%, while its’s year-to-date total return, including dividends, is 36%.
2. Global X NASDAQ 100 Covered Call ETF
This is a dividend ETF that is passively managed in a simple way. which this dividend ETF and investors can use a strong stream of income especially when the stocks are trading in a narrow range. It is important to note that this dividend ETF is not the only covered-call ETF out there in the market.
However, with 5.8 billion dollars in assets under management, this dividend ETF is by far the largest. As an investor, something that is new about this dividend ETF is that it has a net expense ratio of 0.6%. Its current yield is 11.8% and the YTD total return is 10.2%.
3. Alerian MLP ETF
Alerian MLP ETF has an expense ratio of 0.9%. it is a dividend ETF that is passively managed and can be used to track the Alerian MLP infrastructure index. What this entails is that an investor can use this dividend ETF to invest in companies that are in the energy infrastructure sector.
Also worth noting is that this dividend ETF has three Holdings which are namely; midstream partners LP, Enterprise products partners LP, and MPLX LP. The YTD total return of the Alerian MLP Dividend ETF is 34.2% while its current you is 8.9%.
4. Global X SuperDividend ETF
The fourth best ETF dividend in our list is the Global x SuperDividend ETF. With the aid of this ETF, an investor can track the Solactive global SuperDividend index. It is one of the few dividends it’s on our list that offers investors international exposure.
This is because this dividend has its top holdings Has China power International Development Limited and Mountain Inc. What note is that the net expense ratio of this dividend ETF is 0.59%.
3 Practical Steps On How To Invest In ETFs
Investing in an ETF as an investor is not a big deal. to start making passive income in the market with an ETF, what you need to do does not exceed three steps. because of subsequent paragraphs, you are going to be looking into those three steps involved in investing in an ETF.
Step 1: Open A Brokerage Account
Before you start investing in an ETF you need a brokerage account. There are so many online brokers that offer commission-free stock and ETF trades. This is why an investor should not see cost as a factor that will hinder getting a brokerage account for ETF investment.
While researching for the best broker, you should be on the lookout for its features and platform. If you are a beginner investor, it will be best to opt for a broker that offers some educational features.
Step 2: Select Your ETFs
As a beginner investor, going for passive index funds is the best way to start. This is because index funds are cheaper than other funds that are actively managed. The list of dividend ETFs listed above is a fun way to start investing in ETFs and building your portfolios.
Step 3: Let The ETFs Do The Investing For You
It is important to note that the major reason ETFs were designed was to help you do maintenance-free investments. The last step involves buying shares of some great ETFs, then leaving them alone to do what they are designed to do: give you tangible investment return over time.