This post will explore the best equity income ETFs.
Investors looking for both income and potential growth, especially those near retirement, might like these investment options.
They let you invest in a bunch of dividend-paying stocks without needing to pick them yourself. It’s like having a pro manage your investments for you, giving you different income sources without unnecessary hassles.
If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me ([email protected]) or WhatsApp (+44-7393-450-837).
You should consider factors such as the equity income ETFs‘ payout ratio, performance, ownership fees, and the equities it holds when evaluating them.
Please note that certain data and facts might change from the time of writing.
What is an equity income ETF?
An equity income exchange-traded fund can be thought of as a large dividend-paying stock basket. It’s intended to provide investors with both the possibility of their investment’s value increasing over time and a consistent income stream from those dividends.
These funds select equities from businesses that have demonstrated a commitment to paying dividends and are expected to continue doing so. By making numerous investments in various firms, they diversify the risk and strive to pay out higher dividends than the typical stock market.
Therefore, investing in equity income ETFs entails both monthly dividends and a wager on the prospective development of the equities included in the basket.
Equity income ETFs are often called dividend ETFs.
Best Equity Income ETFs
JPMorgan Equity Premium Income ETF
Global stock market exposure and monthly income are the goals of the JPMorgan Equity Premium Income ETF or JEPI.
JEPI makes use of derivatives to increase the yield that is offered. To minimize risk and achieve high returns, it uses a targeted covered-call strategy.
Just sixteen percent of JEPI’s $33.1 billion in assets are concentrated in its top ten holdings as of end-April 2024. The fund is diversified over 133 holdings overall. Information tech, financials, and industrials comprise the three sectors to which the majority of the ETF’s assets belong.
SPDR S&P US Dividend Aristocrats UCITS ETF
With a yield of 2.14% over a 12-month period, this equity income ETF has an ongoing fee of 0.35%. This ETF is more focused on the US market and has a higher proportion of mid- and small-cap firms. The portfolio is heavily weighted in favor of high-quality, highly liquid stocks.
More-volume stocks are now the focus of the fund, which allows the managers greater maneuverability in bear markets.
The ETF has performed strongly over the long term but has trailed the average in the near term. It has exceeded its regular rival over the last five years, but it has underperformed the category index somewhat.
Fidelity Global Quality Income ETF
Over the last three years, this equity income ETF has outperformed other products of a similar nature. It has performed admirably when measured against the category average.
It has an annual fee of 0.40% and has returned 2.68% over the past 12 months.
Fidelity Emerging Markets Quality Income UCITS ETF
When compared to comparable options, this ETF is a less expensive investment. Like many funds of this kind, its investments are mostly made in manufacturing and materials companies. Nevertheless, compared to other funds in its category, it does not invest as much in consumer products or communication services.
This ETF has an ongoing charge of 3.62%.
iShares International Select Dividend ETF
High dividend paying stocks from developed markets outside of the US are the main focus of this equity income ETF. Invested in around 158 companies, mostly in stocks, the fund has $4.1 billion in assets.
It’s a wise option for investors hoping to receive dividend income from non-US firms.
European countries make up the majority of the fund’s contributions, which mostly include the UK, Italy, and Spain.
A substantial percentage of the money invested by holders of this ETF will go toward the financial services industry.
Its 12-month trailing profit is roughly 6.6% for the ETF.
SPDR S&P Dividend ETF
This ETF manages assets close to $20 billion in value. It looks to the S&P High Yield Dividend Aristocrats Index as a benchmark, which is made up of stocks that have raised their dividends consistently for at least 20 years.
The ETF portfolio is mostly composed of utilities, consumer staples, and industrials. Its main areas of concentration are these three industries.
As of April 29, the equities income ETF has returned 9.4% yearly on average over the previous ten years.
Vanguard High Dividend Yield ETF
Large-cap value equities are the primary asset class of this ETF, which is no different from others from Vanguard with modest costs.
The 12-month trailing return and 30-day SEC yield are both nearly 3% for this investment option.
The healthcare, financial, and industrial sectors make up most of its holdings, with a significant amount also in tech companies. Financials alone account for over 20% of the fund’s assets.
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