3 High Dividend ETFs to Buy with $25,000 and Hold Forever

It’s never been easier to invest in exchange-traded funds (ETFs). That said, with so many ETF choices, it can leave some investors’ heads spinning.

So let’s look at three high dividend-paying ETFs that income-seeking investors might consider.

Image source: Getty Images.

Select Energy Sector SPDR Fund

At the top of my list is Select Energy Sector SPDR Fund (NYSEMKT:XLE). This ETF is a great choice for income-seeking investors for several reasons.

First, it focuses on a sector full of high-value, high-dividend-paying stocks: the energy sector. The fund’s holdings are almost entirely made up of U.S. energy companies, such as drillers, pipeline operators, refiners, and others.

Major titles include ExxonMobil, ChevronAnd EOG Resources.

Company Name

Symbol

Percentage of assets

Second, with the fund spending rate of 0.09%, investors give up very little in fees. For example, a $10,000 investment only earns $9 in fees per year. This means that investors keep more of the returns generated by this fund. Additionally, with a current dividend yield of 3.1%, the fund ranks above many of its ETF peers.

Additionally, this ETF has a history dating back to the last century. Over its 25-plus year history, the fund has generated a compound annual growth rate (CAGR) of 8.4%. An initial investment of $25,000 in 1998 would be worth $191,000 today.

In short, this ETF combines strong returns and dividends with low expenses while focusing on some of the most affordable stocks on Wall Street. For income-oriented investors, what’s not to love?

JPMorgan Equity Premium Income Fund

The next step is a fund with a unique value proposition. Instead of only owning dividend-paying stocks, she owns all types of stocks. However, this generates a considerable dividend yield by 7.3%.

How the JPMorgan Equity Premium Income Fund (NYSEMKT: JEPI) do that? This is done through the power of stock options. Specifically, the fund uses a covered call strategy whereby the fund’s managers sell out-of-the-money call options against the fund’s principal securities.

As a result, the fund generates cash from the sale of stock options, which is then passed on to investors in the form of dividend payments.

This way, the fund can generate income from stocks that pay little or no dividends. For example, one of the fund’s top holdings is Amazona stock that has never paid a dividend.

Company Name

Symbol

Percentage of assets

Having started in 2020, the fund is still relatively new. However, with a CAGR of 12.9%, the initial results have been positive. An initial investment of $25,000 would have already grown to $40,000 today.

The story continues

As for fees, the fund charges an expense ratio of 0.35%, which is normal considering how the fund works. Still, that only works out to $35 per year for every $10,000 invested.

So, for income-seeking investors who want to diversify away from traditional value stocks, this ETF is one to consider.

Avant-garde High Dividend Yield Hint ETFs

Finally, there is the Avant-garde High Dividend Yield Hint ETFs (NYSEMKT:VYM). This index fund focuses on large-cap stocks that offer stability and high dividend yields. With more than 400 holdings, the fund offers investors a solid range of stocks.

Holdings come from many sectors, including consumer discretionary, energy and industrials. The main titles are below:

Company Name

Symbol

Percentage of assets

Launched in 2006, the fund has a lifetime total return CAGR of 8.4%, meaning an initial investment of $25,000 would have grown to $102,000 today.

The fund’s 0.06% expense ratio is among the best in the market; investors pay just $6 per year for every $10,000 invested.

As for income, the fund has a current dividend yield of 2.9%. This may seem low for an income-generating ETF, but remember that this fund’s selling point is the quality of its holdings. Rather than focusing on laggards with high dividend yields, this fund sits higher on the stock food chain. He owns well-run companies likely to produce strong long-term results, not just big dividends.

Should you invest $1,000 in Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF right now?

Before purchasing shares of Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF, consider this:

The Motley Fool Stock Advisor analyst team has just identified what they believe to be the 10 best stocks for investors to buy now… and Vanguard Whitehall Funds – Vanguard High Dividend Yield ETF was not one of them. The 10 stocks selected could produce monster returns in the years to come.

Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $579,803!*

Stock Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 values ​​»

*Stock Advisor returns May 13, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Jake Lerch holds positions in Amazon and EOG Resources. The Motley Fool holds positions in and recommends Amazon, Chevron, EOG Resources, Home Depot, JPMorgan Chase, Meta Platforms, Microsoft, Vanguard Whitehall Funds-Vanguard High Dividend Yield ETF, and Walmart. The Motley Fool recommends Broadcom, Johnson & Johnson, and Progressive and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

3 High Dividend ETFs to Buy with $25,000 and Hold Forever was originally published by The Motley Fool

Source