Dividend-paying ETFs (Exchange-Traded Funds) are an excellent way for investors to generate a steady income stream while potentially benefiting from capital appreciation. These ETFs focus on stocks with high dividend yields, making them attractive to income-seeking investors such as retirees or those looking to supplement other income sources. Here, we’ll explore the appeal of dividend-focused ETFs and highlight some popular choices like KBWY, XSHD, DIV, SPYD, SDOG, RDIV, and DHS.
Why Choose Dividend-Paying ETFs?
Dividend ETFs offer several advantages, including:
- Steady Income: Dividend payouts provide regular income, often quarterly.
- Diversification: ETFs hold multiple dividend-paying stocks, reducing the risk of over-reliance on a single company.
- Reinvestment Opportunities: Many investors use dividend reinvestment plans (DRIPs) to compound growth over time.
- Lower Costs: ETFs generally have lower expense ratios compared to mutual funds, helping investors keep more of their returns.
Popular Dividend-Paying ETFs
Invesco KBW Premium Yield Equity REIT ETF
Ticker: KBWY / 12 Mth Div Yield: 8.07% / Distribution Frequency: Monthly
KBWY is tailored to investors seeking high income from real estate investment trusts (REITs). The fund focuses on small- and mid-cap REITs with attractive yields. While REITs are sensitive to interest rate changes, KBWY’s diverse holdings make it a good choice for those looking for income through real estate exposure.
Top Holdings: Global Net Lease / Gladstone Commercial Corp / Service Properties Trust
Invesco S&P SmallCap High Dividend Low Volatility ETF
Ticker: XSHD / 12 Mth Div Yield: 7.27% / Distribution Frequency: Monthly
This ETF targets small-cap stocks with high dividend yields and low volatility. It provides exposure to companies with robust cash flows and manageable debt levels. Small-cap exposure adds growth potential to the high-income stream, although investors should be prepared for slightly higher volatility.
Top Holdings: Blackstone Mortgage Trust / Kennedy-Wilson Holdings / KKR Real Estate Finance Trust
Global X SuperDividend U.S. ETF
Ticker: DIV / 12 Mth Div Yield: 5.91% / Distribution Frequency: Monthly
DIV invests in 50 of the highest-yielding U.S. securities. Its strict focus on yield makes it a consistent income generator, but the emphasis on high dividends sometimes includes companies facing challenges. Careful analysis of its holdings is advisable for long-term investors.
Top Holdings: Virtu Financial / International Paper / Kinder Morgan
SPDR Portfolio S&P 500 High Dividend ETF
Ticker: SPYD / 12 Mth Div Yield: 4.06% / Distribution Frequency: Quarterly
SPYD focuses on the top 80 highest-yielding stocks in the S&P 500. With its emphasis on well-established companies, this ETF combines income generation with the stability of large-cap firms. Its low expense ratio is another attractive feature for cost-conscious investors.
Top Holdings: Kellanova / Entergy Corporation / ONEOK
ALPS Sector Dividend Dogs ETF
Ticker: SDOG / 12 Mth Div Yield: 3.73% / Distribution Frequency: Quarterly
SDOG applies the “Dogs of the Dow” strategy across sectors by selecting the five highest-yielding stocks from each of the 10 S&P 500 sectors. This unique approach ensures sector balance while maintaining high yield exposure.
Top Holdings: Kinder Morgan / Williams Cos / Huntington Bancshares
Invesco S&P Ultra Dividend Revenue ETF
Ticker: RDIV / 12 Mth Div Yield: 3.62% / Distribution Frequency: Quarterly
RDIV prioritizes companies with strong revenue and high dividends, emphasizing financial strength. This combination provides stability along with consistent income, making it a solid choice for conservative investors.
Top Holdings: Bristol-Myers Squibb / Chevron Corp / US Bancorp
WisdomTree U.S. High Dividend Fund
Ticker: DHS / 12 Mth Div Yield: 2.59% / Distribution Frequency: Monthly
DHS focuses on high-yielding companies with sustainable dividends, based on WisdomTree’s proprietary index. Its diversified portfolio leans toward large-cap, value-oriented stocks, offering both income and stability.
Top Holdings: Exxon Mobil / Altria Group / AbbVie
| Ticker | Name | 2024 YTD | Weekly return | Monthly return | 2023 Return | 2022 Return | 2021 Return | 2020 Return | Weekly open | Weekly High | Weekly Low | Weekly close | Volume |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| KBWY | Invesco KBW Premium Yield Equity REIT ETF | 3.28% | -3.86% | -6.99% | 12.92% | -18.98% | 31.20% | -25.09% | 20.28 | 20.36 | 19.32 | 19.43 | 546528 |
| XSHD | Invesco S&P SmallCap High Dividend Low Volatility ETF | -3.00% | -2.65% | -1.66% | 3.02% | -19.48% | 18.32% | -12.89% | 15.55 | 15.61 | 15.02 | 15.07 | 324654 |
| DIV | Global X SuperDividend U.S. ETF | 13.67% | -1.06% | -0.29% | -1.71% | -3.91% | 30.61% | -22.85% | 18.78 | 18.88 | 18.48 | 18.59 | 1048735 |
| SPYD | SPDR Portfolio S&P 500 High Dividend ETF | 20.15% | -0.85% | -1.28% | 3.96% | -1.14% | 32.80% | -11.36% | 46.14 | 46.47 | 45.35 | 45.62 | 3401551 |
| SDOG | ALPS Sector Dividend Dogs ETF | 18.60% | -1.44% | -1.61% | 4.21% | -0.21% | 24.60% | -0.18% | 60.06 | 60.4 | 58.8617 | 59.01 | 146519 |
| RDIV | Invesco S&P Ultra Dividend Revenue ETF | 20.52% | 0.63% | 0.46% | 4.67% | 7.14% | 29.13% | -8.97% | 51.26 | 51.6032 | 50.7 | 51.04 | 128092 |
| DHS | WisdomTree U.S. High Dividend Fund | 22.23% | -0.63% | 1.68% | -0.20% | 7.95% | 23.18% | -5.81% | 98.17 | 98.7792 | 97.19 | 97.4722 | 95394 |
Considerations for Investors
While dividend-paying ETFs provide many benefits, they are not without risks. Factors like economic downturns, interest rate changes, and sector concentration can impact performance. Investors should assess their financial goals, risk tolerance, and time horizon before choosing an ETF. Do seek your personal wealth advisor if it is suitable for you.
Conclusion
Dividend-paying ETFs like KBWY, XSHD, DIV, SPYD, SDOG, RDIV, and DHS cater to income-focused investors by offering diverse exposure to high-yielding stocks. Whether you’re looking to generate passive income, reinvest dividends for growth, or hedge against market volatility, these ETFs can play a valuable role in your portfolio.
