These Dividend ETFs Are Retirees’ Best Friend | personal financing

While there are many big dividend ETFs to choose from, Invesco S&P 500 High Yield Low Volatility Fund (NYSEMKT: SPHD) and the First Trust Morningstar Dividend Leaders Index Fund (NYSEMKT: FDL) They are better for retirees because of their high returns and strong returns. Here is a look at all of them.

The Invesco S&P 500 High Yield Low Volatility Fund tracks the Low Volatility S&P 500 Index, which is made up of 50 stocks in the Standard & Poor’s 500 With the highest dividend yield and the lowest volatility. These are stable, first-class companies that are leaders in their industries and generate consistent profits. Consider the three most important holdings in an ETF: Williams Coss.And the Kinder MorganAnd the chevron. About 22% of the portfolio is in utilities, while 19% is in consumer goods and 12% is in healthcare.

One metric to look at with ETFs is the distribution rate, which is the cash flow paid to investors. It is calculated by the annual distribution of the last distribution and divided by the net asset value, or stock price, of the ETF. There is also a 12-month dividend rate, which is the total payments for the last 12 months divided by the stock price. These ETFs have one of the highest turnover rates, with a current rate of 3.6% and a 12-month rate of 3.4% as of May 25. The 12-month rate is probably the better indicator, as ETF earnings tend to be volatile, and the wider snapshot provides a more accurate view.

This ETF pays a return monthly, with the last payment in May of $0.14 per share. That comes to $1.68 per share per year if he maintains that payment. So if you own 50 shares at the current share price of $47, you’ll get $84 in dividends at the end of the year.

Another advantage of the ETF is its performance. In fact, the ETF is up 5% year-to-date as of May 26, while the S&P 500 is down nearly 15%. It has earned around 9% over the past year as of April 30, and while it doesn’t have a 10-year track record yet, having been launched on October 18, 2012, it has posted an average annual return of 11% since the start. This is a good good return that, with a large return, can provide both income and balance to your portfolio.

The First Trust Morningstar Dividend Leaders Index tracks the Morningstar Dividend Leaders Index. The index uses a proprietary screening model that finds the top 100 highest-returning stocks that have maintained consistent and sustainable dividend policies. Shares are weighted based on the dollar value of the dividend payments, but individual insurance cannot exceed 10% of the portfolio, and shares weighing more than 5% cannot collectively exceed 50% of the portfolio.

Like the Invesco ETF, holdings are essentially stocks of great value for stable companies, but with a much broader mix. The three largest holdings are AT&TAnd the Abviand chevron.

The ETF has a 12-month payout ratio of 3.6%, which is among the highest for ETFs. Unlike the Invesco ETF, it pays a quarterly dividend, most recently in March at $0.28 a share, but the first quarter is usually lower. Last year, she paid about $1.30 per share, which means if you owned 60 shares at $39 per share, her income would be $78 per year.

This First Trust ETF has also generated significant returns compared to the market. It’s up 9% so far as of May 26, beating the S&P 500 by a wide margin. Over the past 12 months as of April 30, it is up 11%, and over the past 10 years its average annual return has been 11%.

Retirees looking for solid ETFs that produce stable income and have positive returns at a time when the market is in turmoil may want to consider these two options.

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Dave Kovaleski has no position in any of the listed stocks. Motley Fool has positions at Kinder Morgan and recommends them. Motley Fool has a disclosure policy.