Dividend ETFs have become increasingly popular for investors seeking steady income and potential growth. Here’s a deep dive into five of the most notable dividend ETFs: $SCHD, $DGRO, $DIVO, $VYM, and $JEPQ. Each of these ETFs offers unique characteristics that cater to different investment strategies.
Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF aims to track the performance of the Dow Jones U.S. Dividend 100 Index. It focuses on 100 high-dividend-yielding U.S. companies with a consistent track record of dividend payments. In 2024, SCHD continued to perform well, driven by strong dividend payments and solid financials of its constituent companies. It has a low expense ratio of 0.06%, making it an attractive choice for income-focused investors. Current Dividend Yield: 3.57%
iShares Core Dividend Growth ETF (DGRO)
DGRO targets U.S. companies with a history of dividend growth. It aims to provide exposure to firms with strong dividend growth potential, making it an excellent option for long-term investors. DGRO saw significant inflows in 2024, as investors sought stability amidst market volatility. The ETF’s focus on dividend growth has made it a resilient choice, with its holdings consistently increasing dividend payouts. The expense ratio is 0.08%. Current Dividend Yield: 2.24%
Amplify CWP Enhanced Dividend Income ETF (DIVO)
DIVO is designed to provide high current income by investing in dividend-paying stocks and employing a covered call strategy. This approach enhances income while potentially reducing volatility. DIVO has garnered attention for its attractive yield and income-enhancing strategy. In 2024, the ETF continued to deliver consistent income, making it a favorite among income-focused investors. The expense ratio for DIVO is 0.55%. Current Dividend Yield: 5.01%
Vanguard High Dividend Yield ETF (VYM)
VYM tracks the FTSE High Dividend Yield Index and targets U.S. stocks with high dividend yields. It’s known for its diversified exposure to various sectors and reliable income stream. VYM has remained a stable performer in 2024, benefiting from its broad diversification and focus on high-quality dividend-paying companies. Its low expense ratio of 0.06% continues to attract cost-conscious investors. Current Dividend Yield: 3.10%
JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)
JEPQ employs a covered call strategy on the Nasdaq-100 Index, generating income through option premiums in addition to dividends. This strategy aims to enhance income while providing exposure to tech-heavy Nasdaq-100 stocks. JEPQ has been a standout performer, especially for investors seeking higher yields. In 2024, the ETF’s covered call strategy allowed it to generate substantial income, making it an attractive option for yield-focused investors. The expense ratio for JEPQ is 0.35%. Current Dividend Yield: 4.75%
Sources:
https://www.schwab.com/schwab-us-dividend-equity-etf
https://www.ishares.com/us/products/239726/