It comes down to the fact that dividend ETFs generate income. People enjoy watching their wealth grow, and dividends have helped investors realize their goal for over the past century. [Dividend ETFs and Taxes]
“According to the excellent Credit Suisse Global Investment Returns Sourcebook 2011, from 1900 to 2010 the U.S. stock market experienced 6.17% annualized real growth,” according to Morningstar analyst Samuel Lee. “About 4.24 percentage points of the market’s return came from dividends, 1.37 percentage points from real per-share dividend growth, and a paltry 0.56 percentage points from price/dividend expansion (also known as the speculative return).”
Dividend ETFs include:
- iShares Dow Jones Select Dividend Index Fund ETF (NYSEArca: DVY)
- SPDR S&P Dividend ETF (NYSEArca: SDY)
- Vanguard Dividend Appreciation ETF (NYSEArca: VIG)
- Vanguard High Dividend Yield ETF (NYSEArca: VYM)
- WisdomTree Dividend Top 100 Fund ETF (NYSEArca: DTN)
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.