Buy dividend stocks right away for consistent payments and potential price increases - Signal suggests
High-Yield Dividend Stocks and ETFs Amid an Interest Rate Cut Cycle
The Federal Reserve has initiated a rate cut cycle, with the first rate cut occurring in September. This move has investors seeking out high-yield investments to capitalize on the current environment. Here are some top choices for high-yield dividend stocks and dividend growth ETFs to consider.
High-Yield Dividend Stocks
For those looking to secure high yields with a monthly income, several dividend-paying REITs and financials are worth considering. These stocks often have yields exceeding 10%, such as Orchid Island Capital (20.69%), ARMOUR Residential REIT (17.66%), Dynex Capital (16.25%), AGNC Investment Corp. (15.27%), and Prospect Capital (14.96%). However, it's essential to note that these stocks, primarily mortgage REITs and business development companies, come with higher risk and sensitivity to interest rates.
Dividend Growth ETFs
For a more balanced approach, top dividend growth ETFs to consider are the Vanguard Dividend Appreciation ETF (VIG), iShares Core Dividend Growth ETF (DGRO), ProShares S&P 500 Dividend Aristocrats (NOBL), and SPDR S&P Dividend ETF (SDY). These ETFs focus on companies with a strong history of dividend growth and offer potential price appreciation alongside income.
| ETF | Yield (approx.) | Key Strategy & Notes | |---|---|---| | Vanguard Dividend Appreciation ETF (VIG) | 1.7% | Focuses on companies with 10+ years of dividend growth, excludes REITs, low expense ratio 0.05%, strong 10-year annualized returns (~12.3%)[1] | | iShares Core Dividend Growth ETF (DGRO) | 2.2% | Focuses on dividend growth among U.S. companies[1] | | ProShares S&P 500 Dividend Aristocrats (NOBL) | 2.1% | Tracks companies with consistent dividend increases, considered high quality[1] | | SPDR S&P Dividend ETF (SDY) | 2.6% | Dividends focus with a solid track record[1] | | Schwab U.S. Dividend Equity ETF (SCHD) | 3.9% | Higher yield among dividend growth ETFs, considers quality and sustainability[1] |
Other Notable Dividend-Focused ETFs
For those seeking a balance between yield and quality factors to minimize dividend traps and target price appreciation potential alongside income, consider Fidelity High Dividend ETF (FDVV), SPDR Russell 1000 Yield Focus ETF (ONEY), and WisdomTree LargeCap Dividend ETF (DLN). These ETFs have yields around 3% or more.
Very High Yield Dividend ETFs
For those seeking the highest dividend yield ETFs, some REIT-focused ETFs with yields near 9-10% may be interesting, such as the Invesco KBW Premium Yield Equity REIT ETF (KBWY). These ETFs tend to be more sensitive to rate cuts and may offer capital gains as borrowing costs decline.
A Note on Boersenmedien AG
Boersenmedien AG has developed the index that the prices of the financial instruments are derived from and holds the rights to it. Boersenmedien AG also has a cooperation agreement with the issuer of the displayed securities, under which it grants the issuer a license to use the index.
Investors should carefully assess their risk tolerance and sector exposure, as high yields can signal greater risk, especially in rate-sensitive sectors like mortgage REITs.
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