Jan 052012

Dividend investing does not have to be difficult if you do a little research. Today’s investors are blessed with a variety of dividend ETF’s that have very low fees and great diversification.
Here I will write about 3 funds and what they offer, they are similar in the number of holdings they each have and the current yields are averaging around 3%. Depending on who your broker is you can trade each of these commission free. With VIG a Vanguard account holder can trade these for free, SCHD can be traded for free for the Charles Schwab account holder and the DVY can be traded for free for those who have a Fidelity account.
Dividends historically have made up a good share of the returns for investors for decades, and while the yields on these funds seem small they do add up to significant amounts over a lifetime of investing and blowing away the returns of those trying to time the market or trade very actively.
A good list to start is here:
VIG Vanguard Dividend Appreciation has 127 holdings currently and a yield of 2.32% It tracks the performance of stocks of companies with a record of growing dividends. The expense ratio is a tiny .18%

SCHD Schwab Dividend Equity has 102 holdings currently and a yield of around 2.880%. This is a newer ETF just going live in October 2011 but it is growing assets quickly as there are zero commissions for the Charles Schwab client. Here too the expense ratio is tiny at .17%

DVY iShares Dow Jones Dividend Index is the Granddaddy of them all with it’s 101 holdings, a current yield of 3.49% and $8.79 billion in assets. That being said the expense ratio is more than double the two above at .40%

 Posted by at 8:54 pm

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