Dividend yield isn’t the most important criterion for choosing an exchange-traded fund to buy as an investment, according to Colorado Wealth Management Fund.
“There are substantial benefits to having a lower level of volatility or a faster growth rate in future dividends,”
the fund says in a Seeking Alpha post. “To further complicate the issue some investors have already picked out several individual stocks for their portfolio and need to find an ETF that will fit around the holdings they already selected.”
The fund has 10 ETF picks for consideration by investors seeking low expense ratios:
- 1. Schwab U.S. Dividend Equity ETF (SCHD)
- 2. Vanguard High Dividend Yield ETF (VYM)
- 3. Vanguard Dividend Appreciation ETF (VIG)
- 4. iShares Core Dividend Growth ETF (DGRO)
- 5. iShares Core High Dividend ETF (HDV)
- 6. WisdomTree LargeCap Dividend ETF (DLN)
- 7. WisdomTree U.S. Dividend Growth ETF (DGRW)
- 8. PowerShares S&P 500 High Dividend Portfolio ETF (SPHD)
- 9. Utilities Select Sector SPDR ETF (XLU)
- 10. Vanguard Consumer Staples ETF (VDC)
Among specific industries, the Utilities Select Sector SPDR provides an investment to a broad group of stable service companies while the Vanguard Consumer Staples ETF owns companies that things people use day to day.
“Utilities are generally regulated monopolies. They are trading at fairly high levels currently but the low interest rate environment is encouraging investors to pay a premium for the reliable earnings and dividends,” according to Colorado Wealth.
“Consumer staples also offer fairly solid levels of sales and some certainty of earnings even in a
down market. The ability to withstand a downturn in the economy encourages investors to bid higher prices since they are able to achieve a respectable dividend yield with some earnings growth without the volatility in earnings experienced by more aggressive sectors.”
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