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Dividend exchange-traded funds (ETFs) are designed to invest in a basket of high-dividend-paying stocks. Such stocks may be either domestic or international and may span a range of economic sectors and industries. However, high-dividend-paying stocks tend to be associated with companies that have a strong history of dividend increases and that usually means bigger, less-risky, blue-chip firms. Such companies include Intel Corp. (INTC), Procter & Gamble Co. (PG), and Nike Inc. (NKE). A dividend ETF can be a great portfolio addition for the risk-averse and income-seeking investor.
The dividend ETF universe is comprised of about 163 distinct ETFs, excluding inverse and leveraged ETFs. The best dividend ETF is the Fidelity NASDAQ Composite Index Track (ONEQ) for Q1 2020. We examine the top 3 best dividend ETFs below.
Performance over 1-Year: 30.7%
3-Month Avg. Daily Trading Volume: 37,090
Assets Under Management: $2,488.6 million
Inception Date: September 25, 2003
Issuing Company: Fidelity
ONEQ is a dividend ETF that invests in stocks of U.S. companies with a variety of market capitalizations and follows a blended strategy, investing in both growth and value stocks. As of February 5, 2020, the ETF’s top three holdings include Apple Inc. (AAPL), Microsoft Corp. (MSFT), and Amazon.com Inc (AMZN), all three of which are considered multinational technology companies.
Performance over 1-Year: 28.9%
3-Month Avg. Daily Trading Volume: 24,905
Assets Under Management: $37.2 million
Inception Date: May 27, 2015
Issuing Company: Global X
YLCO is a dividend ETF focused on the global alternative energy sector, which is comprised of companies involved in the production and distribution of solar, wind, hydroelectric, or geothermal energy. The fund is considered a multi-cap ETF, investing in stocks of companies with a variety of different market caps, and follows a blended value/growth strategy. As of February 5, 2020, the ETF’s top three holdings include EDP Energias de Portugal S.A. (EDP), a Portugal-based electric utilities company, Orsted A/S (ORSTED), a Denmark-based energy firm, and Engie Brasil Energia S.A. (EGIE3), a Brazil-based utility company.
Performance over 1-Year: 27.6%
3-Month Avg. Daily Trading Volume: 93,949
Assets Under Management: $1,197.3 million
Inception Date: August 14, 2012
Issuing Company: First Trust
TDIV is a dividend ETF focused on stocks of large-cap U.S. technology companies. The fund follows a blended strategy, investing in both value and growth stocks. As of February 5, 2020, the ETF’s top three holdings include Apple Inc., Microsoft Corp., and International Business Machines Corp. (IBM), a multinational information technology firm.
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