9 High-Yield Dividend ETFs to Buy to Generate Passive Income

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Passive income — what’s not to like? It’s money that comes to you without your having to actively work for it. There are many kinds of passive income, such as income from rental properties and interest from bonds.

A particularly powerful kind of passive income is that from dividend-paying stocks, because they offer the chance of stock-price appreciation, dividend income, and dividend growth. It can be hard to hunt for the best dividend payers out there, though, so you might instead want to simply park your long-term dollars in one or more exchange-traded funds (ETFs) that focus on dividend income.

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An ETF is a fund that trades like a stock — and often tracks a particular index, too. Here are nine high-yield ETFs to consider. (Note that some have yields that are currently on the high side, while others feature lower yields that are likely to grow faster.)

While these ETFs are focused on delivering income, understand that they’re not the only dividend-paying ETFs out there. In fact, a simple S&P 500 index fund is a dividend payer, too — because many of the 500 companies in the S&P 500 pay dividends. The S&P 500 recently sported a dividend yield near 1.3%.

Check out these ETFs below, which are very dividend-focused. At the end of the table is an S&P 500 index fund, for comparison. Note that I’m including a fairly big bunch because I’m trying to encompass funds from several major fund companies. I’m doing so because depending on which company administers the 401(k) account at your workplace, if you have such an account, you might be able to invest in one or more of the funds below via your 401(k).

ETF

Recent Yield

5-Year Avg. Annual Return

10-Year Avg. Annual Return

iShares Preferred & Income Securities ETF (NASDAQ: PFF)

6.00%

3.11%

3.95%

SPDR Portfolio S&P 500 High Dividend ETF (NYSEMKT: SPYD)

4.18%

8.67%

N/A

Schwab U.S. Dividend Equity ETF (NYSEMKT: SCHD)

3.61%

13.05%

12.02%

Fidelity High Dividend ETF (NYSEMKT: FDVV)

2.87%

14.91%

N/A

Vanguard High Dividend Yield ETF (NYSEMKT: VYM)

2.65%

11.34%

10.53%

iShares Core Dividend Growth ETF (NYSEMKT: DGRO)

2.24%

12.59%

12.49%

SPDR S&P Dividend ETF (NYSEMKT: SDY)

2.22%

9.55%

10.42%

Vanguard Dividend Appreciation ETF (NYSEMKT: VIG)

1.65%

12.93%

12.33%

First Trust Rising Dividend Achievers ETF (NASDAQ: RDVY)

1.49%

15.05%

13.21%

Vanguard S&P 500 ETF (NYSEMKT: VOO)

1.3%

16.07%

13.70%

Data source: Morningstar.com, as of Oct. 22, 2024.

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