High dividend ETFs: 7 to consider in 2024

If I were to ask you, “What is the most important factor when evaluating an ETF?” What would you say?

For most traders, the answer would likely be "performance." While performance is certainly an important factor to consider, it shouldn't be the only one. In fact, when looking for high dividend ETFs, there are three points that traders should keep in mind: yield, consistency, and diversification.

High dividend ETFs are a portfolio of stocks that pay high dividends. With the right research, these funds could provide investors with a steady source of income that beats the traditional savings account rate. Below, we will explore the criteria for evaluating ETFs, the high dividend ETFs for 2024 and answer some frequently asked questions (FAQs) about these investment options.

3 points for evaluating ETFs

1. Yield: The yield refers to the income generated by the ETF through dividends or interest payments. A higher yield indicates a potentially higher return on investment. For example, if an ETF has a yield of 4%, it means investors can expect to earn $4 for every $100 invested.
2. Consistency: Consistency refers to the stability and reliability of an ETF's performance over time. It is important to consider how consistently the ETF has delivered returns and whether it aligns with your investment goals. For instance, you may compare the historical returns of two ETFs over a specific period to determine which one has shown more consistent growth.
3. Diversification: Diversification refers to the variety of assets held within an ETF. A well-diversified ETF spreads its investments across multiple sectors or industries, reducing the risk of being heavily dependent on a single asset or market segment. For example, an ETF that includes stocks from various sectors like technology, healthcare, and finance offers better protection against the potential decline of any one industry.

7 high dividend ETFs to consider in 2024

Here are the 7 high dividend ETFs you might want to consider in 2024:

1. Vanguard International High Dividend Yield ETF (VYMI): This ETF focuses on international stocks with high dividend yields. It aims to provide investors with exposure to companies outside the United States that have a strong track record of paying dividends. Currently (in 2023), it has a dividend yield of 4.39%.
2. Invesco SPX 500 High Dividend Low Volatility ETF (SPHD): This ETF seeks to track the performance of high dividend-yielding companies in the SPX500 Index while also aiming for lower volatility. It combines dividend income potential with a strategy to reduce downside risk. Currently (in 2023), it has a dividend yield of 4.55%.
3. WisdomTree U.S. SmallCap Dividend Fund (DES): This ETF targets small-cap companies in the United States that have a history of paying dividends. It offers exposure to domestic small-cap stocks with attractive dividend yields. Currently (in 2023), it has a dividend yield of 2.92%.
4. FCF International Quality ETF (TTAI): This ETF focuses on international companies that exhibit quality characteristics, including strong financials and stable earnings. It aims to provide investors with exposure to high-quality companies with a focus on dividend-paying stocks. Currently (in 2023), it has a dividend yield of 10.38%.
5. Invesco High Yield Equity Dividend Achievers ETF (PEY): This ETF invests in U.S. stocks that have a consistent history of increasing dividend payments. It aims to provide exposure to companies with a track record of growing their dividends over time. Currently (in 2023), it has a dividend yield of 4.82%.
6. Schwab U.S. Dividend Equity ETF (SCHD): This ETF focuses on high-quality U.S. stocks that have a history of paying dividends. It aims to track the performance of companies with sustainable dividend payments and attractive dividend yields. Currently (in 2023), it has a dividend yield of 3.58%.
7. Fidelity High Dividend ETF (FDVV): This ETF aims to provide exposure to high-dividend-yielding U.S. stocks. It invests in companies that have demonstrated a commitment to paying dividends and have the potential for future dividend growth. Currently (in 2023), it has a dividend yield of 3.32%.

Conclusion

Please note that the above ETFs (mentioned above) do not constitute financial advice or a recommendation to invest. Skilling currently only offers ETF CFDs, which are derivative products that allow traders to speculate on the price movements of ETFs without owning the underlying assets. To get started and understand CFDs trading, where you can trade ETFs, cryptos, Forex and more, you might consider starting with a funded demo account with $10,000 in virtual funds to trade. This will allow you to familiarise yourself with online trading, trading strategies, and Skilling’s platform without risking real money. So why not give it a try? Try Skilling's demo account today.

FAQs

Are high dividend ETFs a good investment for income?

They could be a great investment for generating passive income, particularly in times of low interest rates. However, it’s important to remember that high dividend yields can sometimes be a sign of elevated risk, so be sure to weigh yield against other factors like consistency and diversification.

Can high dividend ETFs provide diversification for my portfolio?

Yes, high dividend ETFs could provide diversification for an equity portfolio, particularly if you’re looking for more stable and mature companies with a history of strong dividend payouts. However, it’s still important to ensure that your overall portfolio is diversified across different asset classes and geographies.

What risks should I be aware of when investing in high dividend ETFs?

The biggest risk of investing in high dividend ETFs is the potential for dividend cuts or suspensions, which could cause the fund’s NAV to decline and reduce your income. Other risks to be aware of include exposure to certain sectors or geographies, elevated valuations, and interest rate risk.

Past performance does not guarantee or predict future performance. This article is offered for general information and does not constitute investment advice. Please be informed that currently, Skilling is only offering CFDs.