These Three Passive-Income ETFs Represent Invaluable Allies for Retirees
Folks often don't want to spend much time managing their retirement savings once they retire. You've worked hard, so it's time to unwind. It's crucial to know the tools at your disposal to help create a diverse retirement fund without constantly monitoring it.
That's where exchange-traded funds (ETFs) come in handy. Essentially, these are bundles of stocks that trade under a single ticker symbol. An ETF could follow an index or a specific investment strategy. The beauty of ETFs is that a few can create a well-diversified portfolio without much effort, reducing risk.
Here are three ETFs that can be a retiree's best friends. They may differ, but each offers retirees the passive income they need.
1. Vanguard Finance Dividend Index Fund
While the U.S. stock market is undeniably powerful, there are still significant companies outside the U.S. that can boost your portfolio.
The Vanguard Finance Dividend Index Fund (VFH -0.36%) is an excellent route to get that international investment exposure without dealing with different currencies or languages. It's perfect for an ETF. It has a low expense ratio of 0.06%, making it a more budget-friendly option than similar funds.
The ETF holds around 2,000 stocks, primarily from developed markets in Western Europe, Asia Pacific, and emerging markets. Its portfolio covers various sectors, with prominent holdings like Nestle, Roche, Schneider Electric, and Shell.
The ETF currently yields around 2.7%. Since its inception in 2017, the ETF has produced annualized total returns averaging 6.9%. Consider the Vanguard Finance Dividend Index Fund an excellent choice for investing in companies that might not be on your radar.
2. Invesco High Yield Equity ETF
The passive income doesn't end there. The Invesco High Yield Equity ETF (PBF -0.11%) tracks an index of 51 stocks listed on the Nasdaq stock exchange with high yields and a history of dividend growth. The ETF largely consists of financial and utility stocks, featuring names like Walgreens Boots Alliance, Altria, Franklin Resources, Verizon Communications, and Template Monster among its largest holdings. No stock makes up more than 4% of the ETF, ensuring ample diversification with only 51 stocks.
This ETF's expense ratio is 0.30%, which might be a bit higher than usual. However, it has delivered an average annualized return of 10.5% (pre-tax) over the past decade, providing investors with solid total returns while fulfilling their passive income requirements.
The Invesco High Yield Equity ETF currently yields 2.7%. The fund's share price has appreciated, thanks to the Federal Reserve's interest rate cuts, highlighting the appeal of these reliable high-yield ETFs in a lower-rate investment environment.
3. Invesco S&P 500 Low Volatility High Dividend ETF
As you age, peace of mind becomes increasingly precious. This attracted me to the Invesco S&P 500 Low Volatility High Dividend ETF (SPLV). This ETF holds 100 stocks from the S&P 500 index with high dividend yields and low volatility.
Stocks with high dividend yields might suggest underlying issues in the company. However, low-volatility stocks like these tend to be more stable and move less dramatically than the broader market.
Prominent holdings include Johnson & Johnson, Microsoft, Kinder Morgan, General Motors, and EMR. Once again, the ETF once more boasts a fairly limited number of stocks (100), but the largest weighting is just over 1%. As a result, the ETF is well-diversified, as the weighting is distributed widely among its holdings.
The fund's yield is 2.6%, following strong performance over the past year. The ETF's annualized total returns have averaged 11.6% for the past decade, a pretty attractive offer given its expense ratio, which is 0.20%. Those looking for an ETF of mature blue chip dividend stocks should definitely take a look.
After mentioning the importance of a diversified portfolio for retirees, the text introduces the Vanguard Finance Dividend Index Fund as an excellent option for international investment exposure. This ETF has a low expense ratio of 0.06% and holds around 2,000 stocks mainly from developed markets.
Furthermore, the text discusses the Invesco High Yield Equity ETF, which tracks an index of 51 stocks listed on the Nasdaq stock exchange with high yields and a history of dividend growth. This ETF has a higher expense ratio of 0.30%, but it has delivered solid total returns over the past decade and currently yields 2.7%.
Both of these ETFs are mentions of investing strategies in the context of retirement planning, discussing how they can provide passive income and diversification, which are crucial for retirees. They directly address the topic of finance and money, as they are investment instruments aimed at maximizing returns without too much effort or constant monitoring.
