Consider Dividend ETFs for Monthly Income
If you’re in the market for an investment that provides monthly dividends, dividend ETFs might be worth your attention. They can offer a steady income stream, which can be appealing not just for retirees but for anyone looking to ease the financial strain in today’s economy.
In fact, the Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) stands out with lower costs than the Schwab US Dividend Stock ETF (SCHD), higher yields, and a more robust portfolio.
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Month-to-month income is increasingly attractive—especially when household budgets are a concern. Dividend-paying ETFs enable you to benefit from both capital appreciation and a reliable income stream. Unlike stocks that distribute dividends quarterly or bonds that do so semi-annually, ETFs can offer the kind of monthly revenue that helps with covering expenses or even reinvesting.
Receiving payments 12 times a year can certainly make budgeting easier. If you’re searching for a monthly dividend ETF, SPHD might be the way to go. It’s noteworthy that while SCHD is a solid option, SPHD typically performs better in this regard.
Launched in 2012, the SPHD employs a straightforward selection process focused on financially sound large companies within the S&P 500. The emphasis here is on stocks that yield the most dividends, which means it leans toward sectors like utilities and real estate. Another aspect to consider is that each stock within the fund carries equal weight, protecting against excessive volatility.
Currently, SPHD boasts a dividend yield of 4.29%. If you had invested $10,000 in it back in 2015, your investment would have grown to approximately $12,680—quite a bit higher than the SCHD’s yield of 3.81%.
The expense ratio for SPHD is 0.30%, which is still relatively low compared to SCHD’s 0.060%. Targeting the 500 best stocks within the S&P 500, SPHD invests in those that exhibit low volatility while offering high returns.
This fund achieves a commendable balance of risk and return, with a dividend yield that exceeds that of the S&P 500 by more than threefold. Interestingly, it stays away from the high-tech sector, making it an appealing choice if you already own significant tech stocks or aren’t keen on that industry at all.
Sector allocation within SPHD looks like this:
- Real estate: 22.82%
- Daily necessities: 17.88%
- Public works: 13.65%
- Healthcare: 11.42%
As for exposure, it’s worth noting that SCHD lacks significant representation in real estate, which is one area where SPHD can fill the void. In fact, it has the highest allocation to real estate among its peers, providing an avenue for investors to engage with this sector without requiring a hefty investment.
Approximately 40% of SPHD is placed in mid-cap stocks, with large-cap and small-cap stocks accounting for 29% and 13%, respectively. The fund’s top 10 holdings consist of well-established dividend payers like Verizon, Pfizer, and UPS, collectively representing 26% of the entire portfolio.
SPHD pays out dividends on a monthly basis, with the latest distribution at $0.19476, culminating in an annual dividend of $2.07. Impressively, it has maintained this dividend distribution for over 12 straight years.
Integrating the Invesco S&P 500 High Dividend Low Volatility ETF into your portfolio might not just provide additional income; it could offer peace of mind as well.
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This approach doesn’t involve boosting your income or maintaining a strict budget—it’s surprisingly simple and effective. It’s rather surprising that more individuals haven’t embraced such straightforward habits, but nonetheless, exploring this shift could unlock higher savings potential.
