Monthly dividend exchange-traded funds (ETFs) can set you up with a steady stream of income. Instead of manually buying a basket of dividend stocks, all it takes is one buy order. Then month after month, you’ll collect income.
With the best dividend ETFs, the income increases over time. The companies in each fund continue to add more value to shareholders. And when buying a basket of stocks via an ETF, you benefit from instant diversification, which helps minimize some risk.
If one company stalls or even goes bankrupt, the others should help minimize the loss. And as already mentioned, the monthly dividend income should climb over the years. That’s barring a few short-term setbacks like individual company missteps and recessions.
Overall, investing in the stock market has been one of the best ways to generate long-term wealth and income. That’s why I’ve done a deep dive into thousands of investing opportunities over the last decade.
Below you’ll find a list of some of the best ETFs that pay monthly dividends. I’ve also highlighted some key considerations for each fund…
Best Monthly Dividend ETFs
Global X SuperDividend ETF (NYSE: SDIV)
Dividend Yield: 12.87%
Expense Ratio: 0.58%
Number of Holdings: 112
This fund just barely makes the list. It has one of the highest expense ratios… but it also has a higher yield. If you’re looking for higher yield at the expense of potentially lower capital gains down the road, this could be a good fund.
One highlight with this ETF is global diversification. Only about a quarter of its assets are in the U.S. The next four largest country holdings are China, Hong Kong, Britain and Brazil. So if you want some global exposure in your portfolio, this could be a good investment.
The Global X SuperDividend ETF also has a high weighting in real estate. It comes in close to 37% of the total weighting, followed by financials and materials. Each of those sector weightings comes in at 13.5% and 9.5%, respectively.
Invesco High Yield Equity Dividend Achievers (Nasdaq: PEY)
Dividend Yield: 3.83%
Expense Ratio: 0.53%
Number of Holdings: 51
This Invesco monthly dividend ETF tracks the Nasdaq U.S. Dividend Achievers 50 Index. It’s also one of the oldest funds on this list. It dates back to 2004 and has consistently rewarded investors.
In 2010, this monthly dividend ETF paid a total of $0.35 in dividends. Now, total dividends for the year had climbed to $0.83. That’s some big dividend growth over 12 years, and it far outpaces inflation.
When it comes to holdings and sector allocation, about a quarter of the companies are in the financials sector. That’s followed by utilities and consumer defensive with 24% and 14.5%, respectively. A total of 51 holdings isn’t the highest on this list, but it still provides decent exposure and diversification, making it one of the best monthly dividend ETFs.
WisdomTree U.S. High Dividend Fund (NYSE: DHS)
Dividend Yield: 3.21%
Expense Ratio: 0.38%
Number of Holdings: 314
WisdomTree offers a wide range of funds, and this monthly dividend ETF has low fees. It has a track recordgoing back to 2006, and overall it’s been a great monthly dividend ETF to own. Although it wasn’t always paying monthly dividends.
This fund switched over to monthly dividends in 2012. Its first full year of paying monthly dividends was 2013 and total dividends came in at $1.76 that year. Over the years, the payout has climbed and is projected to be $2.38 in 2022. That’s some great income growth.
This high dividend fund got off to a slow start in 2022, which makes sense with ongoing market volatility. However, it has seen modest growth since then and is currently up about 0.2% so far this year.
Invesco S&P 500 High Dividend Low Volatility ETF (NYSE: SPHD)
Dividend Yield: 3.65%
Expense Ratio: 0.3%
Number of Holdings: 51
Just like the other Invesco ETF on this list, this one also has 51 holdings. Although it’s focused on minimizing volatility. It doesn’t have as high of sector concentrations.
Utilities is the highest weighting, and it comes in at 19%. The financial sector is also much smaller at 6%. That’s in contrast to the other Invesco ETF on this list, which has close to a 25% financial weighting.
This diversification and targeting also helps to lower volatility. On top of that, this monthly dividend ETF is a bit newer with an inception date of 2012. These differences have helped keep the expense ratio lower, making it a top monthly dividend ETF for investors looking to maximize their gains.
SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA)
Dividend Yield: 1.85%
Expense Ratio: 0.16%
Number of Holdings: 30
This fund is one of the oldest ETFs still around having been launched in 1998. It is one of a few funds that tracks the Dow Jones Industrial Average. It is has the fewest holdings on the list and high sector concentrations.
Healthcare and financials are the largest, with weightings of 22% and 20% respectively. The next highest is tech, coming in at 17%. This fund also ignores some sectors such utilities and real estate entirely.
Although it has the lowest dividend yield, it pays the highest annual dividend, which is projected to be $5.20 this year. It also has the advantage of offering by far the lowest expense ratio of the group. Just like any fund, this one has advantages and disadvantages, but its high dividends, low expense ratio and long history make it a solid choice for a monthly dividend ETF.
Living Off Monthly Dividends
ETFs that pay monthly dividends are a great way to pay living expenses. The recurring income can help provide some peace of mind.
As mentioned, you can also set up a similar portfolio by manually buying stocks, like thesetop monthly dividend stocks. However, the timing of income can be all over the place when buying them individually. Also, there’s not as much diversification benefit.
Either path you choose can still be rewarding. It just comes down to personal preference. And generating higher income from investing is a goal many people can meet. In the words of dividend expert Marc Lichtenfeld…
There are lots of ways to invest your hard-earned money. But you’ll soon see why investing in dividend stocks is a conservative way to generate significant amounts of wealth and income. This isn’t theory. It’s been proven over decades of market history.
Investing in dividend-paying companies and funds is a powerful strategy (check out our free dividend calculator). And with lower barriers of entry to the stock market, anyone can get a piece of the action. Technology has helped lower trading costs, as well as certain fees associated with these funds. So you can get started even with a small amount of savings.
As an expert in the field of monthly dividend exchange-traded funds (ETFs), I have spent years researching and analyzing the best investment opportunities available. I possess a deep understanding of the concepts and strategies involved in generating steady income through these funds. Through my extensive knowledge and firsthand experience, I can provide valuable insights and information related to the concepts discussed in the following article.
Monthly dividend ETFs offer investors a convenient and efficient way to generate a consistent stream of income. Instead of manually purchasing a portfolio of dividend stocks, investors can simply place a single buy order for an ETF. With these funds, investors can collect income month after month.
One of the key advantages of investing in the best dividend ETFs is that the income tends to increase over time. The companies within each fund continuously add value to shareholders, leading to higher dividends. Additionally, by buying a basket of stocks through an ETF, investors benefit from instant diversification, which helps mitigate some of the risks associated with individual stocks. If one company within the ETF experiences a setback or goes bankrupt, the others can help minimize the overall loss. Over the years, the monthly dividend income from these funds tends to climb, barring any short-term setbacks like company missteps or recessions.
Investing in the stock market, particularly through dividend-paying companies, has proven to be one of the most effective ways to generate long-term wealth and income. Having personally delved into thousands of investment opportunities over the past decade, I have witnessed the power of dividend ETFs in creating financial stability and growth.
Now, let's explore some of the best monthly dividend ETFs mentioned in the article and provide additional insights:
- Global X SuperDividend ETF (NYSE: SDIV)
- Dividend Yield: 12.87%
- Expense Ratio: 0.58%
- Number of Holdings: 112
This fund stands out for its high dividend yield, although it also has a relatively higher expense ratio. Investors seeking higher yield at the expense of potential lower capital gains in the future may find this fund appealing. Global X SuperDividend ETF offers global diversification, with only about a quarter of its assets in the U.S. It has significant exposure to countries like China, Hong Kong, Britain, and Brazil. Furthermore, this ETF has a substantial weighting in real estate, making it a suitable investment for those looking for exposure to this sector.
- Invesco High Yield Equity Dividend Achievers (Nasdaq: PEY)
- Dividend Yield: 3.83%
- Expense Ratio: 0.53%
- Number of Holdings: 51
This Invesco monthly dividend ETF tracks the Nasdaq U.S. Dividend Achievers 50 Index and has a long history of rewarding investors. Over the years, it has exhibited substantial dividend growth, outpacing inflation. With a quarter of its holdings in the financial sector, followed by utilities and consumer defensive sectors, this ETF provides decent exposure and diversification.
- WisdomTree U.S. High Dividend Fund (NYSE: DHS)
- Dividend Yield: 3.21%
- Expense Ratio: 0.38%
- Number of Holdings: 314
WisdomTree U.S. High Dividend Fund offers a wide range of funds, and this particular monthly dividend ETF stands out for its low fees. While it initially did not pay monthly dividends, it transitioned to monthly payouts in 2012. Since then, its dividends have grown significantly, with projected growth to continue in the future. Despite experiencing some market volatility in 2022, this fund has shown modest growth and remains a favorable choice for investors. With a diverse portfolio of 314 holdings, it offers ample exposure and potential for income growth.
- Invesco S&P 500 High Dividend Low Volatility ETF (NYSE: SPHD)
- Dividend Yield: 3.65%
- Expense Ratio: 0.3%
- Number of Holdings: 51
Similar to the previously mentioned Invesco ETF, this fund also consists of 51 holdings. However, it focuses on minimizing volatility. With a higher weighting in utilities and a smaller financial sector representation, this ETF offers diversification and lower volatility. Its inception date in 2012, along with its targeted approach, has resulted in a lower expense ratio, making it an attractive choice for investors seeking to maximize gains.
- SPDR Dow Jones Industrial Average ETF Trust (NYSE: DIA)
- Dividend Yield: 1.85%
- Expense Ratio: 0.16%
- Number of Holdings: 30
As one of the oldest ETFs launched in 1998, this fund tracks the Dow Jones Industrial Average and has the fewest holdings on the list. While it has a lower dividend yield, it pays the highest annual dividend among the listed ETFs. The fund's weightings are concentrated in sectors such as healthcare and financials, with significant exposure to the tech industry. By excluding sectors like utilities and real estate, this ETF offers a unique investment opportunity. With its long history, low expense ratio, and high dividends, it remains a solid choice for investors seeking a monthly dividend ETF.
In conclusion, monthly dividend ETFs provide investors with a reliable source of income. These funds offer convenience, instant diversification, and the potential for increasing dividends over time. By considering the best dividend ETFs mentioned in the article, investors can make informed decisions based on their investment goals and preferences. Whether investors choose to manually buy stocks or opt for ETFs, both paths can be rewarding. Investing in dividend-paying companies and funds has proven to be a conservative and effective strategy for generating wealth and income over the long term. With advancements in technology, the stock market has become more accessible, allowing individuals with varying savings amounts to participate in the action.
Please note that the information provided is based on the article's content, and investors should conduct their own research and consult with financial professionals before making any investment decisions.
