"But when it comes to evaluating these ETFs, it's important to look beyond yield. The best dividend-paying ETFs have track records of consistently paying and increasing dividends. These funds also screen stocks for more than just high-yields. They look for components like strong financials, consistent performance, low volatility and more. Some use different income generating strategies like selling options in addition to investing in dividend stocks. And many of these funds are constantly competing for your money."
"The fund invests in high-quality companies known for sustainability of dividend distributions. It also screens for companies with strong fundamentals including revenue, cash flow and profits. The fund is well diversified across multiple sectors. But its main holdings lie in the energy, consumer staples and healthcare sectors. The latter two are known as defensive sectors, which means they historically have remained stable even in times of market downturns."
Retirees and other investors seek a lifetime of passive income and often use dividend-paying ETFs to supplement diversified portfolios. Dividend-paying ETFs hold from a handful to hundreds of dividend stocks selected by large asset managers. Evaluation requires more than yield; top funds show consistent dividend payments and growth, screen for strong financials, steady performance, and low volatility, and sometimes use income strategies like selling options. Competition among funds creates many choices. SCHD focuses on high-quality, dividend-sustainable companies across energy, consumer staples, and healthcare, yields near 4%, and holds about $71 billion in assets.
Read at 24/7 Wall St.
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