Many investors don’t realize the power and advantages of purchasing ETF dividend paying stocks. When most people hear of an ETF, they immediately think of index funds or something to that nature. Very rarely does the average investor immediately consider ETF’s as a dividend investment option.
There are plenty of advantages to using an ETF as an investment option that returns a competitive yield. Let’s break down some of the basics of ETF’s and then talk about how we can leverage them to our advantage.
What is an ETF?
An ETF or exchange traded fund is a collection of stocks that make up the value of a security. An ETF trades just as a stock does and has a price that is constantly updated throughout the day, unlike a mutual fund. As the security is bought and sold, the price fluctuates just as it does for a stock. There are all different types of ETF’s available, including ones that pay a dividend.
Advantages of Purchasing ETF’s
An ETF provides the diversification of an index fund with the ability to trade it just like a stock. The security can be shorted, bought on margin, and there are also options that can be traded against them. Simply put, an ETF gives you the advantages of buying and selling a stock, coupled with the diversification that you would get in a mutual fund.
The fees for purchasing and owning an exchange traded fund are also very low when comparing them against a mutual fund for example. Keep in mind that an investor will still be required to pay a commission to their online discount broker, just as they would with a normal stock. All in all, trading ETF’s are a low cost alternative to a mutual fund.
ETF Dividend Paying Stocks
When it comes to high yielding securities, ETF dividend paying stocks make up some of the best investment options available today. There are actually several ETF’s that make up some of the highest dividend paying stocks. If you are looking for a diversified investment option that pays out a dividend, then an ETF may be the best option for you.
Finding the Top Dividend Paying Stocks
Not interested in investing in ETF dividend paying stocks? Even if you want to stick with purchasing individual stocks, an investor should not ignore an ETF entirely. Since ETF dividend securities are built to return a solid yield, an investor should look at what stocks make up the fund. Since these funds want to stay competitive and return a nice yield, the managers have done their due diligence on the stocks.
As as place to start, check out these ETF dividend paying stocks for some great investment opportunities – DVY, PEY, PFM, FVD, and DLN.
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