One of the dangers income investors face when reaching for fat dividends is that too often the higher the yield, the higher the risk. Luckily, they’ve got a friend: the dividend ETF.
Exchange-traded funds are an easy way to mitigate some of that reaching-for-yield risk. After all, diversification is your friend, and ETFs offer one-stop-shopping for scores of stocks. Sure, one name might cut its dividend or see its share-price plunge, but it won’t take the whole dividend ETF — and your portfolio — with it.
Another advantage of dividend ETF investments is that they make it easy for retail investors to buy foreign stocks. You see, some of the best dividend-payers on the planet list only on the over-the-counter market in the U.S — or don’t trade here at all. And income-starved investors need to spread out to see any kind of decent return in this low-rate environment.
Finally, you’ve got to like ETFs for their low fees, transparency and liquidity. There’s something reassuring about knowing that you can get out of position at any time during the trading session.
And if your dividend ETF just so happens to yield 6% or more … so much the better.
With that, here are three ETFs with some of the highest dividend yields on the market: