This fund has a net expense ratio of of 0.48 percent, which is higher than that offered by Vanguard, but lower than many actively managed funds. This fund is intended to be passively managed based upon its selection criteria. Investors who are interested in dividend payments will appreciate the fact that OUSA pays out its distributions on a monthly basis. While the payments vary from month to month, they do provide a steadier stream of income than those funds that pay quarterly.
Fidelity Core Dividend ETF
According to Fidelity, this fund attempts to reflect the performance of large- and mid-cap stocks that currently pay dividends and that are expected to continue pay out and grow their dividends over the long haul. The expense ratio on this ETF comes in around the midpoint of those listed in this piece. The net expenses come in at just 0.29 percent of the fund’s value.
The yield on this fund is well above that offered by the S&P 500, and there are many familiar names among the largest holdings of the Core Dividend ETF, which trades under the ticker of FDVV. The fund focuses on US companies, so when the US economy does well, this fund should also do well. Regardless of the direction of the Dow or the S&P, this fund should continue to pay out distributions to investors.
Vanguard Total Stock Market Index Fund
Why would a broader index fund land on a list of dividend ETFs? Because it pays a dividend. The Vanguard Total Stock Market Index Fund pays distributions to investors on a quarterly basis. These dividends largely track the overall market, but they are not insignificant.
These distributions have rolled toward investors since the fund’s inception, and they’ve increased nearly fourfold since that time. This is some serious dividend growth, to say the least. Additionally, the fund has an extremely low net expense ratio of only 0.04 percent. Those who reinvest these distributions can grow their income over time.
When looking into dividend ETFs, it’s important to look at a number of factors. The geographic area of the world that an investor wants to focus on should come into play. The strategy of the fund should come into play as well. Does the ETF focus on high yield stocks, or is it looking to see dividend growth potential?
Finally, one of the biggest drags on returns is the expense ratio. There are plenty of dividend ETFs that offer expense ratios of less than 0.5 percent. Lower fees allow returns to compound, rather than expenses, and this is definitely a factor to take into account when making an investment in an ETF.
This article was republished with permission from Sure Dividend.