One of the best ways to gain exposure to dividend stocks is with an exchange-traded fund (ETF). ETFs are defined by Investopedia as “a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same way a regular stock can.”
Not only do ETFs offer diversification among top dividend-paying stocks, but they also do so at far less cost. For example, the Global X Super Dividend ETF (SDIV) trades at $13.25, which includes holdings in Iron Mountain (IRM), Starwood Property (STWD), KKR Real Estate (KREF), and Williams Cos. (WMB), amongst others.
If you were to buy 100 shares of the SDIV ETF, it would cost $1,325. If you were to buy 100 shares of, for example, WMB, it would cost $2,613 for just that one stock.
That’s the beauty of investing in an ETF. We can own more for far less.
Other top dividend ETFs to consider include:
Global X Super Dividend U.S. ETF (DIV)
Expense Ratio: 0.45%
Monthly Distribution Yield: 5.23%
Since bottoming out around $10 in early 2020, the the Global X Super Dividend U.S. ETF (DIV) is up more than 90% at $19.57 per share. The ETF invests in the top 50 dividend stocks in the United States. The ETF also pays a monthly dividend yield of 5.23% and holds positions in companies including Pfizer (PFE), Holly Energy Partners (HEP), Public Storage (PSA), and Iron Mountain (IRM).
SPDR S&P Global Dividend ETF (WDIV)
Expense Ratio: 0.40%
Distribution Yield: 4.9%
At $66 per share, the SPDR S&P Global Dividend ETF (WDIV) invests in high-yield global stocks with stable dividends for at least 10 years. The ETF yields 4.9%, and holds positions in Keyera Corporation (KEYUF), Exxon Mobil (XOM), H&R Block Inc. (HRB), and Shaw Communications (SJR) to name a few. While the ETF is struggling a bit at the moment, it’s been explosive since bottoming out around $40.
iShares Emerging Markets Dividend ETF (DVYE)
Expense Ratio: 0.49%
Distribution Yield: 6.27%
At nearly $40 a share the DVYE ETF invests in the top 100 dividend-paying stocks in emerging markets. It yields 6.27%, and holds positions including Adaro Energy (ADRO), Exxaro Resources, Taiwan Cement Corp., Systex Corp., Oil India Ltd., and Times China Holdings. Since finding double bottom support in late 2020, the DVYE ETF ran from about $28 to $39.