The BEST 4 Dividend ETFs for Passive Income

Fidelity Article:

🙌 H E L P F U L L I N K S 🙌

Timestamps:
0:00 - Starting Zone
0:58 - Format
1:21 - What is a Dividend ETF?
2:30 - Illustration of Dividend Mechanics
3:40 - Tax Considerations
5:01 - 4. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
6:38 - 3. SPDR S&P Dividend ETF (SDY)
7:48 - 2. Vanguard Dividend Appreciation ETF (VIG)
9:03 - 1. Schwab U.S. Dividend Equity ETF (SCHD)

1. Overview
So in individual stocks, if you own the stock at least one business day before whats known as the "Ex-dividend" date, you receive the dividend. So if the ex-date as its known is on say, Monday May 3rd, if you own the stock on the prior business day, which would be April 30th, you would receive the dividend.

Now you're probably wondering, but Humphrey, if a Dividend ETF owns individual companies that pay out dividends on different dates, am I just continually getting dividends?

The answer is actually, no.

In most Dividend ETFs, you'll get paid out dividends quarterly. What they actually do is hold onto all the dividends of each company for you, and then pay them all out at once. They are typically paid in cash or in additional shares of the ETF.

In terms of the actual mechanics of how they figure out how much to pay you, the ETF pools together dividends that have been paid that quarter, and then distributes them proportionally to all the shareholders.

2. Taxes
In terms of taxes, the amount that you pay in taxes on dividends depends on if the dividend is "QUALIFIED" or not.

Qualified dividends are GOOD = if you hold the ETF for more than 60 days before the ex dividend date, AND the ETF holds the underlying stocks for more than 60 days before the ex-date, the tax that is long term capital gains - or between 0%-15/20ish percent most commonly.

Nonqualified is not as good, you'll pay ordinary income tax rates on nonqualified dividends, which are just any dividends owned for less than 60 days by either you or the ETF.

Now, that's why buying Dividend ETFs is best done in a Roth IRA - because any of those gains you receive on dividends will be tax free. If you want to learn more about Roth IRAs, I have a lot of videos on those that you can go ahead and check out.

Picks:
4. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)
This ETF just focuses on 50 stocks that offer above average dividend yields and lower price volatility, this is good for someone who wants a stable ETF investment that pays out.

3. SPDR S&P Dividend ETF (SDY)
This is the S&P Dividend ETF by State Street. According to their fact sheet, the fund "screens for companies that have consistently increased their dividend for at least 20 consecutive years, and weights the stocks by yield" which means the more dividend a company pays out, they'll buy more of that holding.

2. Vanguard Dividend Appreciation ETF (VIG)
This is the most popular fund with over $45 billion in assets, and this one actually focuses on Dividend Growth stocks - so it's kind of a blend of a traditional dividend ETF + a little bit of growth.

1. Schwab U.S. Dividend Equity ETF (SCHD)
This is one of the best Dividend ETFs out there in my opinion because of its cheap fees which I'll talk about shortly. "The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Dividend 100™ Index."

📲SOCIALS:

PS: I am not a Financial Advisor, any investment commentary are my opinions only. Some of the links in this description are affiliate links that I do receive a commission for.

[liseduncan]

Okay, your channel is literally my TV. I park in front of your channel for as long as an episode of any good entertainment series!

[davidorta]

Really appreciate what you do, school won't teach me any of this👍

[ThreeTwentyTech]

Dividend ETF = any money they make, a small portion goes to you!

[efficienzayd]

This has zero dislikes for a reason. Great video!

[Daniel_Braun]

Dividend ETFs are great to have in a portfolio! I’d rather buy these instead of picking many individual dividend focused stocks. VUG is one of my favorites as well

[izik]

Thank you for another great content! I have a question I am in my mid 40s and just opened a new ROTH IRA. This is what I came up with:
VTI 50%
SCHD 15%
VXUS 15%
REITs 10%
BND 10%
Please let me know what you think of this. Thank you so much for all your videos!!!

[verzijlj]

Where can I invest into the Hump ETF? Looks promising!

[chn]

This was so well done, time stamps and detailed descriptions. Subscribed now!

[spacecampdropout]

Could you please add the cost per share (at time of filming)of any stocks you suggest to save us some time of having to look them up individually while watching your videos? Also could you start suggesting more ETFs or stocks that are under $100? Not everyone can afford even 1 SPY or VOO share. Hope you consider. Thank you.

[gtcaleb]

This has become one of my favorite channels on YouTube, thank you for all the straight forward advice. Between you and Graham Stephan, you two have guided me through investing, opening an IRA and looking ahead retirement is looking very good. Thanks again!

[PurposeSpeaker]

Hi Humphrey, what's a better investment dividend stocks or dividend ETF's? Thanks

[johnburger]

Great video 👍 SCHD is the only holding I have in my Schwab account

[denzelnicholas]

Subscribed! Would be good to get an update on this topic given the shift in economic landscape. I'm trying to find the best Dividend ETFs for Passive Income and DRIP

[JC-JC]

Question! if you've been gambling in stocks for so long and finally want to settle down in ETFs and get a Roth and contribute 6.5k or whichever limit this year is. Do you A) All in multiple ETF funds or DCA off the bat?

[anranwei]

Thank you so much for the informative video as always! I’ve been learning a lot from you, and your videos are fun to watch! I would really appreciate it if you could do a video on the pros and cons of investing in a Target Date Fund for a Roth IRA.

[skyeemedia]

Great videos. Only thing, I have to keep pausing to take notes and I feel as if you go through them a bit fast.. Might have to play this at half speed lol.

[muradbabaniyazov]

Not an ETF of dividend stocks, but an ETF that pays dividends - QYLD has worked well for me. It's a Nasdaq 100 Covered Call ETF, and is considered a good hedge against bearish markets.

[AstorSkywalker]

Wise words "if ever a bear market"... I'm buying on 2022

[EdgarMartinez-butd]

Can you make a video on how to file taxes or how taxes work in general. I’m about to graduate high school and can’t get straight answers

[ilyjustinluuga]

Just contributed some $$$ to SDY after watching this video! As per usual, you never disappoint! Congratulations on your ongoing success! I’m happy that your channel is getting more steam and attention! Continue to make these videos and pray that I get a raise so I can join you in crypto! Hope all is well. ✨