Consequently, income-oriented investors who are wary about the potential risks in the bond market could switch over to dividend stock ETFs as an alternative. For instance, the Vanguard High Dividend Yield ETF (NYSEArca: VYM) has a 2.89% 12-month yield and iShares Core High Dividend ETF (NYSEArca: HDV) has a 3.47% 12-month yield. [Why Invest in Dividend ETFs]
VYM selects stocks based on annual dividend yield forecasts, excluding more sensitive areas like real estate investment trusts, master limited partnerships and micro-caps. The portfolio includes a collection of large-cap heavy names with an above average yield. HDV also screens picks to account for financially healthy, high-quality U.S. companies with relatively high dividend payouts.
Additionally, a number of high-quality dividend-paying stocks can be an attractive substitute to low-yield bonds, and in the ETF space, investors have many options to choose from. For instance, the Vanguard Dividend Appreciation ETF (NYSEArca: VIG) tracks U.S. stocks that have increased dividends on a regular basis for at least 10 consecutive years and has a 2.13% 12-month yield. The Schwab US Dividend Equity ETF (NYSEArca: SCHD) includes 100 stocks based on strong fundamentals, dividend yields and consistent dividend payouts for at least 10 consecutive years, and it has a 2.71% 12-month yield. The SPDR S&P Dividend ETF (NYSEArca: SDY) holds firms that have a minimum dividend increase streak of 20 years for inclusion and shows a 2.24% 12-month yield. The ProShares S&P 500 Aristocrats ETF (NYSEArca: NOBL) only includes companies that have increased their dividends for at least 25 consecutive years and offers a 1.63% 12-month yield. [Retirees May Need More Stock ETFs to Meet Income Needs]
For more information on dividend stocks, visit our dividend ETFs category.
Max Chen contributed to this article.