Retirees not only want steady income, but they also want to keep their nest egg safe from unexpected market swings.
Toward that goal, Brad Kenagy, an investor writing on the Seeking Alpha blog
, found six exchange-traded funds with a history of steady payouts that may increase over time.
“While the portfolio I created does not have a large yield, it has exposure to high-quality U.S. companies with long a long history of dividend increases, international stocks with low volatility and short-term investment grade corporate bonds and variable rate preferred stocks,” he writes.
6 ETFs for Safe Retirement Income
- ProShares S&P 500 Dividend Aristocrats ETF (NOBL): This fund “holds stocks from the S&P 500 that have increased their dividend for at least 25 consecutive years,” according to Kenagy. “In addition, what makes NOBL different from other dividend ETFs is that the fund equally weights its holdings, which reduces concentration risk.”
- PowerShares S&P International Developed Low Volatility Portfolio ETF (IDLV): The fund ”holds mainly large-cap companies in other developed markets excluding the United States and overlays a low volatility strategy to select only the stocks with the lowest volatility.”
- Vanguard Short-Term Corporate Bond Index ETF (VCSH): “I chose VCSH because the yields for investment grade corporate bonds are higher than corresponding yields on treasury bonds. I did not want to choose just any corporate bond fund; therefore, I decided to select a short-term fund because of the possibility of rising interest rates.”
- PowerShares Variable Rate Preferred Portfolio ETF (VRP): “I chose to include VRP because of its 5 percent dividend yield and the fact that it has income upside potential during a rising rate environment.”
- Horizons S&P 500 Covered Call ETF (HSPX): This fund “writes out-of-the-money calls on the long positions it holds of all option-eligible stocks within the S&P 500. In a declining market, covered call strategies are attractive because of the potential to capture all of the premiums from selling the calls.”
- PIMCO Enhanced Short Maturity Strategy ETF (MINT): “For retirees, having cash or a cash substitute for an emergency or well-timed purchase of an income-generating investment that is trading at depressed values is something to consider.”
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