One of the greatest inventions in the stock market is the exchange-traded fund, and it’s a specifically helpful tool for income investors considering the glut of dividend ETFs on the market.
These baskets of stocks took the whole concept of a mutual fund and made the same product available to investors — just at a much lower cost. In addition, ETFs give investors the opportunity to move in and out of funds just as they would other stocks.
And while you lose the notion of true, 100% active management, the number of managers who have repeatedly beaten the market or mechanical models remains small.
The rise of the ETF has been a particular boon for investors in dividend stocks, as these equities are bundled into dividend ETFs that can often offer very attractive yields. Plus, a lot of overlooked stocks get exposure this way, so you get some diversification with your high yield.