These 5 Dividend ETFs Are Retirees’ Best Friend | personal financing
Retirement is about enjoying your golden years, and living from the nest of eggs you built with your life of hard work. But protecting your savings is just as important as accumulating it in the first place.
Exchange-traded funds (ETFs) are baskets of stocks chosen by professional money managers who trade under a single ticker symbol. A basket of high-quality ETFs is like pressing an easy button to build a diversified portfolio. Here are five ETFs that retirees need to know about.
1. Buying the best companies in America
The broader stock market has historically moved higher over time, despite the ups and downs that shake things up from time to time. The Standard & Poor’s 500 It is an excellent index that brings together 500 of the largest and most dominant American companies.
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SPDR S&P 500 Trust ETF (NYSEMKT: spy) It is a great ETF for riding the historical performance of the stock market; It mimics the S&P 500 and pays quarterly dividends with a dividend yield of 1.4%. Its expense ratio is only 0.09%, so it’s a cheap and simple tool to get a wide variety of stock market in your portfolio.
2. Real Estate ETF with Return
Buying ETFs doesn’t just mean you have to own the shares; Real estate is arguably the oldest type of investment in the world, and you can benefit from owning real estate with an ETF like Selecting the real estate sector SPDR ETF (NYSEMKT: XLRE).
These ETFs focus largely on real estate investment trusts (REITs), companies that acquire and rent real estate and distribute dividends to shareholders as dividends. The most important ETF holdings include American TowerAnd the PrologiesAnd the Crown Castle International. The fund pays a quarterly dividend and yields 2.8%, and its expense charges are a trickle at just 0.10%.
3. Take advantage of junk bonds to get income
You can invest in corporate debt through the bonds they issue. When a company with medium credit sells bonds, it is often called junk bond. They take on more risk but pay a higher return for compensation. ETF of junk bonds like iShares Fallen Angels Bonds in US Dollars (NASDAQ: FALN) Displays a variety of them so that no single company is dealing with debt repayment.
For example, bonds of highest holding, Vodafone, You only have 2% weighting in the ETF. higher risk, higher return; The fund pays a dividend of 4.3%. In addition, the fund pays a bonus monthly to retirees who are looking for recurring payments to cover their living expenses. The fund charges a 0.25% expense ratio because managers are more involved in managing higher-risk holdings.
4. Get dividends from preferred stock
Preferred shares can be a great addition to a retirement portfolio; These are dividend-paying fixed income assets but are not as volatile as common stocks. Retirees who want a monthly return with a lot of thought can add in SPDR Wells Fargo Preferred Stock ETF (NYSEMKT: PSK).
The fund has a dividend yield of close to 5.8%, the highest of five funds here. It leans heavily on the financial sector, which comprises 70% of holdings. The ETF also charges an expense ratio of 0.45%, making it among the most expensive funds you will encounter. But if you’re looking for a high return, it’s hard to go wrong here.
5. An Energy ETF You Can Rely On
Many assume that the entire energy sector is volatile because of how the price of oil can falter over time. However, medium companies that transport oil and gas are more stable because they depend on the volume they move, not the prices of the underlying commodities.
ETF Global X MLP and Energy Infrastructure (NYSEMKT: MLPX) It can give retirees broad exposure to the various pipelines and other medium businesses that support our economy. Includes the highest collectibles box Enbridge And the Kinder Morgan Among other things. The fund generates a generous return of 4.8% and charges an expense rate of 0.45%. Fossil fuels should remain relevant for decades, so that retirees can purchase this oil and gas fund with confidence.
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Justin Bob has no position in any of the mentioned stocks. Motley Fool has positions at American Tower, Crown Castle International, Enbridge, Kinder Morgan and Prologis. Motley Fool recommends Vodafone. Motley Fool has a disclosure policy.