The Highest Paying Dividend Index ETFs For Your 2017 Portfolio – Sector By Sector


stock-mutual-fund-etf

Investing can be a daunting affair for first timers or newbies and yes, even experts, but the rise of ETFs (exchange traded funds) have made the access to traditionally expensive mutual funds much easier to secure for those with smaller accounts or limited investment knowledge. How can I be invested while reducing my risk? This both a financial question and a knowledge one. We believe the answer is to own every sector through an index ETF. Indexes are passively managed, meaning they are set and left to the fundamentals of the markets and economies they serve. These index ETFs usually have much cheaper expense ratios because of their passive management making it easier for investors, beginners and experts alike, to not see their gains eaten away by inundated fees often tacked on by active managers. There is now enough research after decades of tracking to show by the likes of John Bogle, founder of Vanguard, and others in the passively managed space that index ETFs and mutual funds far outperform their actively managed counterparts.

On top of that, there is the consideration of dividend or investment income. Dividends are money paid out by companies usually on a quarterly basis from a company’s ongoing operating income. It should be noted that not all companies pay dividends. However, in ETFs because they hold a myriad of companies there is a higher probability that there will be dividends present. Dividends help households reduce the income risk of job loss. This is how many wealthy households even during recessions are able to maintain and how many pay far less in taxes. Of the three incomes (earned, passive, investment), it is earned income, or the income we get up and go to work for everyday that is taxed at the highest rate. No matter how much you earn, your dividend tax rate is never above 20 percent versus a high of almost 40 percent in earned income tax rate, so more income from dividends is always advantageous.

Our list was calculated by taking the three lowest expense ratios of ETFs by sector according to the website ETF Database’s screener. Once those were identified we looked at the dividend yield that each ETF was paying and subtracted the expense ratio. This would appear in a calculation as nominal dividend yield minus expense ratio equals real dividend yield and there would be our winner for 2017. It should be noted that dividends are not fixed and companies can reduce or increase them as they sit fit, usually based on a company’s financial health.

You can buy this list and know that you are well diversified across every sector of the economy and will be receiving dividend payments along the way. If you really want to simply things, just head over to the Motif Investing platform and buy the All-Sector ETF of ETFs Motif, which is each of these ETFs below in one security and constructed by HBCU Money. Click here to find out more.

BASIC MATERIALS

Ticker Symbol: XLB

Issuer: State Street

Real Annual Dividend Yield: 1.80%

Annual Dividend: $0.97 / share

consumer goods

Ticker Symbol: FSTA

Issuer: Fidelity

Real Annual Dividend Yield: 2.45%

Annual Dividend: $0.79 / share

financial

Ticker Symbol: FNCL

Issuer: Fidelity

Real Annual Dividend Yield: 1.73%

Annual Dividend: $0.63 / share

healthcare

Ticker Symbol: XLV

Issuer: State Street

Real Annual Dividend Yield: 1.45%

Annual Dividend: $1.11 / share

industrial goods

Ticker Symbol: XLI

Issuer: State Street

Real Annual Dividend Yield: 1.92%

Annual Dividend: $1.29 / share

services

Ticker Symbol: XLY

Issuer: State Street

Real Annual Dividend Yield: 1.56%

Annual Dividend: $1.39 / share

technology

Ticker Symbol: XLK

Issuer: State Street

Real Annual Dividend Yield: 1.61%

Annual Dividend: $0.84 / share

utilities (tIE)

Ticker Symbol: XLU

Issuer: State Street

Real Annual Dividend Yield: 3.27%

Annual Dividend: $1.66 / share

Ticker Symbol: FUTY

Issuer: Fidelity

Real Annual Dividend Yield: 3.27%

Annual Dividend: $1.06 / share

real estate

Ticker Symbol: VNQ

Issuer: Vanguard

Real Annual Dividend Yield: 4.70%

Annual Dividend: $3.98 / share

Disclaimer: This article is in no way financial or investment advice. Each person’s investment and tax needs vary. Please consult your financial adviser or CPA before making any decisions. HBCU Money, its staff, or ownership has no holdings in any of the aforementioned investments. 

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